Nvidia lost $ 5.5 billion through US chip restrictions for China

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nvidia has announced that the company will suffer a financial loss of $ 5.5 billion due to new export restrictions from the United States for its H20-KI chips. This measure represents a further escalation in the increasing race for dominance in the field of artificial intelligence (AI), which led to a dramatic decline in corporate shares.

The H20 chip and its effects

The H20 chip, which was only launched last year, was specially developed to meet the strict US export controls for China. As a result, Nvidia was able to continue doing business with the country. Compared to the sale to China sales-block-intl-hnk/index.html"> H20 less computing power.

It is assumed that the H20 chip has contributed to the successful development of Deepseek’s Chatgpt-like AI model R1. This model was trained at a fraction of the costs of American counterparts and surprised the technology industry, which triggered a AI revolution in China.

new export restrictions

in a regulatory Notification On Tuesday, Nvidia announced that the US government announced last week that a special license for export to China was now required for the H20 chips. Last year China 13 % of sales from.

The company stated that as part of the result, it will report about $ 5.5 billion in depreciation in connection with H20 products for "inventory, purchase obligations and associated provisions" as part of the result. In the pre -exchanging trading activities, the stocks fell by 5 %.

analyst opinions

Analysts, led by Dan Ives, the global director of technology analysis at Wedbush Securities, explained that the financial effects are relatively low. Nevertheless, the new restrictions are a “strategic blow” for Nvidia's efforts to continue to interact with its Chinese customers.

"This disclosure is a clear sign that Nvidia now has massive restrictions and hurdles when selling to China, since the Trump administration has recognized that there is a company that drives the AI ​​revolution, and that is Nvidia," says the analysts in a research letter from Tuesday.

further trade restrictions

nvidia has been caught in the crossfire in recent years because the United States is trying to block China's access to American technology to improve its military and AI systems. The US Ministry of Trade confirmed on Tuesday that new export license requirements for China-related exports of the H20 chips from NVIDIA and the MI308 chips of another American AI chip manufacturer, AMD, are introduced.

"The Ministry of Commerce is obliged to implement the president's instruction to protect our national and economic security," a spokesman for the Ministry of Commerce was cited.

nvidia taught that the license request will apply indefinitely. How the US government will give the licenses remains unclear. The company rejected it to make a comment beyond the message.

FAZIT

The tightening of the trade war between the USA and China is likely to lead to further restrictions. "While the messages about Nvidia are worrying, they are not surprising because we are in the middle of a trade war between the USA and China and expect both sides to take further measures," continued Ives.

In 2022, US President Joe Biden began to restrict the sale of advanced semiconductors from chip manufacturers such as Nvidia to China, for fear that they could be used to strengthen military capacities. The controls were then given to the sale of semiconductor manufacturing devices,

The series of restrictions are increasingly criticized by American technology giants, especially Nvidia, that argue that they undermine the competitiveness of the USA.

ned Finkle, Vice President for government matters at NVIDIA, wrote in a blog post Opportunities for industries promote both domestic and abroad. But the restrictions put this global progress "in danger" and threaten to "undermine innovation and economic growth worldwide," he said.