KEY TAKEAWAYS
- Nvidia said it is set to take a $5.5 billion first-quarter charge after the U.S. limited exports of its artificial intelligence (AI) chips to China.
- The news, the latest salvo in an escalating trade war between Washington and Beijing, sent the firm’s shares tumbling in premarket trading Wednesday.
- China’s Ministry of Commerce also imposed export controls on AMD’s sales of its AI chips there.
Nvidia (NVDA) said it expects to take a $5.5 billion charge in its fiscal 2026 first-quarter results after the U.S. limited exports of its artificial intelligence (AI) chips to China.
The news, the latest salvo in an escalating trade war between Washington and Beijing, sent the firm’s shares tumbling roughly 6% in premarket trading Wednesday.
The company said in a regulatory filing late Tuesday that it was informed by the U.S. government on April 9 that it would be required to have an export license “for the indefinite future” to sell its H20 chips to China. Nvidia said the license requirement is aimed at addressing the risk that the chip would be “used in, or diverted to, a supercomputer in China.” The chip is less powerful than its newer ones and tailored to meet existing export limits for the Chinese market.
Nvidia’s Q1 results, which are expected May 28, are set to include the $5.5 billion charge “associated with H20 products for inventory, purchase commitments, and related reserves,” it said. According to Morningstar Research, “China has shrunk to about 10% of Nvidia’s revenue from 20%, and we now expect it to go to close to zero.”
The New York Times reported that a spokesman for the U.S. Commerce Department said “that the administration was issuing new export licensing requirements for the Nvidia H20; a chip from Advanced Micro Devices, the MI308; and their equivalents.” AMD (AMD) shares also were down about 6% in premarket trading.