The announcement sent shockwaves through markets, slashing Nvidia’s shares by around 6% in after-hours trading.
Late on Tuesday, Nvidia confirmed in an official filing that its specialized H20 AI chip—explicitly designed to meet previous export controls and targeted specifically for China—would now require a special license indefinitely. This regulatory shift comes as part of broader U.S. measures aimed at ensuring that American-made AI technology does not contribute to Chinese supercomputer capabilities amid ongoing technological rivalry.
As a direct result, Nvidia expects to record $5.5 billion in charges in the current financial quarter ending April 27, stemming from accumulated H20 chip inventory and contractual sales commitments. Nvidia’s remarkable rise in recent years, driven by its cutting-edge chips fueling AI advancements, has seen its stock soar over 1,400% since 2020, making it one of the select U.S. companies valued in trillions of dollars.
However, Nvidia was not the only casualty. Advanced Micro Devices (AMD), a significant U.S. competitor, also saw shares plummet by 7% in after-hours trading. Meanwhile, in Asia, South Korean chip giants Samsung Electronics and SK Hynix experienced declines of up to 3%, and Dutch lithography machine maker ASML reported a 5% drop in European markets, citing uncertainties caused by recent U.S. tariff announcements.
The Trump administration, which initiated the latest round of restrictions, has signaled additional tariffs on imported semiconductors later this week, though exemptions may apply for certain businesses. This move aligns with broader U.S. efforts to assess and protect national security interests linked to chip imports, especially from Taiwan, a critical hub for semiconductor manufacturing.
In a counter-move highlighting its commitment to domestic chip capabilities, Nvidia separately announced plans to invest up to $500 billion in AI infrastructure across the U.S. over the next four years. While Nvidia designs its chips domestically, manufacturing remains outsourced primarily to the Taiwan Semiconductor Manufacturing Company (TSMC).
Initial restrictions on advanced AI chips began under the Biden administration in October 2022, leading China to tighten its own export controls in response.
Meanwhile, China is tightening its grip on foreign firms, advising local airlines to stop taking deliveries of Boeing planes in retaliation for U.S. tariff escalations. President Trump recently raised tariffs on Chinese imports to a total of 245%, citing retaliatory duties by Beijing.
With both powers locked in a full-blown trade and tech standoff, the global semiconductor industry is navigating a volatile new normal.
