Nvidia, a major microchip manufacturer, announced that they will incur $5.5 billion (£4.2 billion) in costs due to the US government’s tighter export rules to China. The rules are expected to impact Nvidia’s H20 AI chip, which is particularly popular in China. The US government’s decision comes amid an escalating trade war between the US and China. Nvidia’s shares plummeted by almost 6% in after-hours trading. According to the company, this decision was announced by the US government last week and will indefinitely restrict the export of the H20 chip to China, including Hong Kong. The license requirement addresses the risk that the covered products may be used or diverted to a supercomputer in China. Nvidia declined further comment, but a research consultant at Counterpoint Research, Marc Einstein, believes the estimated cost aligns with their estimates. However, he views this as a negotiating tactic and expects potential exemptions or policy changes. The chips remain a contentious issue in the US-China tech supremacy competition, which US President Donald Trump aims to address. Nvidia’s AI chips are crucial in US export controls and have been influential in the AI revolution. The company’s value was negatively affected in January when a Chinese rival, DeepSeek, managed to build an AI app at a fraction of the cost. Nvidia stated the $5.5 billion charges will relate to inventory, purchase commitments, and reserves. Podcast host Rui Ma anticipates the complete decoupling of US and China AI semiconductor supply chains if the restrictions continue.

Source: https://www.bbc.com/news/articles/cm2xzn6jmzpo