Nvidia Sees $5.5 Bln Charge As US Restricts Chip Sales To China; Shares Down

(RTTNews) - Shares of Nvidia Corp. were losing around 6 percent in early morning trade on Wednesday on the Nasdaq, after the artificial intelligence chipmaker said that it would take $5.5 billion in charges after the U.S. government barred exports of its H20 AI chip to China, a key market.

Amid the escalating U.S. -China trade war, the Trump administration said it would require new licensing requirements for exports to China of Nvidia's H20, one of its most popular AI chips. A U.S. Commerce Department spokesperson reportedly said, "The Commerce Department is committed to acting on the President's directive to safeguard our national and economic security."

The news comes after Nvidia on Monday announced its commitment to manufacture up to $500 billion worth of American-made AI supercomputers in US within the next four years.

Nvidia stated that the expected $5.5 billion in charges are associated with H20 products for inventory, purchase commitments and related reserves.

Nvidia's H20 is considered to be one of the most advanced chip available for sale in China. Amid China's booming AI industry, Nvidia has been getting orders for H20 chips from Chinese tech majors Tencent, Alibaba and TikTok parent ByteDance.

According to Nvidia, the U.S. government was restricting H20 sales to China citing the risk of using the chips in a supercomputer. Since 2022, U.S. has placed restrictions on selling chips for use in supercomputers in China.

Nvidia, for the first time, is preparing to produce AI supercomputers entirely in the U.S. under its proposed $500 billion AI chip commitment. The company said it is working to build and test NVIDIA Blackwell chips in Arizona and AI supercomputers in Texas.

NVIDIA Blackwell chips have started production at the manufacturing partner TSMC's chip plants in Phoenix, Arizona, while the firm is building supercomputer manufacturing plants in Texas, with Foxconn in Houston and with Wistron in Dallas. Mass production at both plants is expected to ramp up in the next 12-15 months.

On the Nasdaq, Nvidia shares were trading at $105.50, down 6 percent.