Nvidia faces $5.5 billion charge as US restricts chip sales to China

By Stephen Nellis

(Reuters) -Nvidia on Tuesday said it would take $5.5 billion in charges after the U.S. government said it would require licenses for exports to China of its H20 artificial intelligence chip, which has been one of its most popular chips.

Nvidia's AI chips have been a key focus of U.S. export controls as U.S. officials have moved to keep the most advanced chips from being sold to China. Almost immediately after those controls were implemented, Nvidia began designing chips that would come as close as possible to U.S. limits while still being legal to sell in China.

Nvidia shares were down about 6% in after-market trading.

The H20 is one of those chips. Chinese companies including Tencent, Alibaba and TikTok-parent ByteDance had been ramping up orders for H20 chips due to booming demand for low-cost AI models from startup DeepSeek, Reuters reported in February.

Nvidia said on Tuesday that the U.S. government informed it on April 9 that the H20 chip would require a license to be exported to China and on April 14 told Nvidia those rules would be in place indefinitely.

Nvidia's filing did not indicate how many, if any, of those licenses the U.S. government might grant.

Nvidia declined to comment beyond its filing. The U.S. Department of Commerce, which oversees U.S. export controls, did not immediately return a request for comment.

The $5.5 billion charges are associated with H20 products for inventory, purchase commitments and related reserves, Nvidia said.

The news comes as Nvidia said on Monday it was planning to build AI servers worth as much as $500 billion in the U.S. over the next four years with help from partners such as TSMC, in step with the Trump administration's push for local manufacturing.

(Reporting by Stephen Nellis in San Francisco and Utkarsh Shetti in Bengaluru; Editing by Devika Syamnath and Lisa Shumaker)