Nvidia Shares Slide As US Blocks AI Chip Sales to China

Nvidia disclosed in a regulatory filing on Tuesday that future sales of its H20 accelerators to Chinese customers will require a license from the US Department of Commerce.

The company said the licenses are unlikely to be granted.

As a result, Nvidia expects to record a $5.5 billion charge in the first quarter of fiscal year 2026 — the current quarter — due to H20 inventory and canceled orders.

The H20 is a lower-spec version of Nvidia’s leading AI accelerators, developed to comply with prior US export rules targeting China.

Despite its reduced capabilities, the H20 remains highly capable and can be linked in clusters to form powerful computing systems.

US officials have expressed concern that such systems could enable China to build supercomputers with potential military applications, including nuclear simulation.

Shares of Nvidia fell about 5% in after-hours trading on Tuesday following the disclosure.

In fiscal year 2025, 13% of Nvidia’s revenue came from customers with billing addresses in China.

That figure is down from 26% in fiscal 2022, before Washington began tightening restrictions on exports to Chinese firms.

In 2022, the Biden administration banned exports of Nvidia’s most advanced chips to China but allowed the sale of reduced-performance versions.

The new restrictions effectively prohibit even those scaled-down versions.

The latest development marks a sharp turn in Nvidia’s interactions with the US government.

On April 9, the company received notification of the new export controls.

Just days later, on Monday, Nvidia and the administration announced a $500 billion investment in US technology infrastructure.

That total includes domestic capital expenditures by Nvidia’s cloud customers such as Amazon, Microsoft, and Google, as well as a new US assembly facility for Nvidia AI servers.

Asked for further comment, a spokesperson for Nvidia said the company had “nothing to add beyond the filing.”