Nvidia Sinks After Warning Trump Curbs Will Cost $5.5 Billion

President Donald Trump’s administration has barred Nvidia Corp. from selling its H20 chip in China, an escalation of Washington’s tech battle with Beijing that will cost the company billions of dollars and hamstring a product line it explicitly designed to comply with previous US curbs.

The US government informed Nvidia on Monday that the H20 would require a license to export to China “for the indefinite future.” The new rules address Washington’s concerns that “the covered products may be used in, or diverted to, a supercomputer in China,” the company said in a filing. Nvidia warned it will report about $5.5 billion in writedowns during the current quarter, tied to inventory and commitments for the chip.

Its shares slid about 6% as the markets opened in New York, leading a broad selloff in semiconductor firms from the US to Japan. South Korean chipmakers Samsung Electronics Co. and SK Hynix Inc. were down by around 3%. Advanced Micro Devices Inc., which also said it expects to take a charge related to the Trump chip curbs, slumped as well.

The slide was compounded as ASML Holding NV reported disappointing financial results for the first quarter. The Dutch company, which sells the most advanced machines to manufacture chips, said its orders for the first quarter were almost a billion euros less than expected and warned that tariffs will add to uncertainty in the industry.

Nvidia’s stock had dropped 16% this year through Tuesday’s close, after gaining more than 200% in 2024.

The new restrictions are among the clearest signs yet that Trump will stay the course on Washington’s efforts to limit China’s semiconductor and artificial intelligence ambitions. His team has been exploring such a step since the start of the administration, Bloomberg News reported in January, continuing conversations that began under President Joe Biden.

Trump’s commerce secretary, Howard Lutnick, has pledged to be “very strong” on China chip curbs — particularly after the emergence of AI startup DeepSeek. He recently sanctioned dozens of Chinese firms that Trump officials allege are aiding Beijing’s military efforts. In the Asian country’s chipmaking arena, Huawei Technologies Co.’s AI accelerators are the closest competitor to Nvidia’s and AMD’s offerings, though they still lag significantly in terms of performance.

“The US government’s strengthened regulations on Nvidia can be seen as part of the ongoing trade war between the US and China,” said Tomo Kinoshita, global market strategist at Invesco Asset Management. “However, it is also a policy driven by concerns over China’s rise in the electronics sector, and in that sense, it is likely to become a permanent policy.”

US officials first barred Nvidia and other AI chipmakers from selling their most advanced models to China in October 2022, over concerns that the technology could give Beijing a military edge. Since then, the China controls have ballooned to include an increasingly large set of semiconductor manufacturing tools, as well as a wider range of both processors and high-bandwidth memory chips, which are essential for AI applications.

Nvidia designed the H20 chip in response to 2023 measures that restricted another China-focused processor, the H800, which the company debuted following the initial curbs. The H20 is intended to be less powerful, and it doesn’t perform as well as Nvidia’s top-of-the-line offerings for the training of models. But it can still be used to develop and run AI software and services, and it’s particularly well-suited to the inference stage: the point at which AI models recognize patterns and draw conclusions.

Bloomberg's Michael Shepard Reports.

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