Nvidia is now facing new export restrictions from the U.S. government. The company announced on Tuesday that it must obtain a license before selling its H20 AI chips to China. This rule takes effect immediately and will stay in place indefinitely.
According to U.S. officials, the concern is that China could use these chips in building supercomputers. That risk has led to tighter control over advanced AI technologies leaving the country.
The financial impact on Nvidia could be huge. The company expects to take a $5.5 billion charge in its fiscal Q1 2026, which ends April 27. After the news broke, Nvidia’s stock dropped by around 6% in after-hours trading.
The H20 is currently the most powerful chip Nvidia is allowed to sell to China under existing export rules. With this latest change, even that limited access now comes with stricter oversight.
A day before the filing, Nvidia made another big move. It pledged to invest hundreds of millions of dollars to produce AI chips in the U.S. over the next four years. While the announcement made headlines, many noted it lacked clear details.
The timing has raised eyebrows. Last week, an NPR report revealed that Nvidia CEO Jensen Huang may have discussed export rules during a dinner at former President Trump’s Mar-a-Lago resort. He reportedly promised to invest more in U.S. data centers, possibly in a bid to ease regulatory pressure.
Still, the pressure had already been building. Several government officials had called for tougher rules on the H20. Their concern grew after Chinese AI startup DeepSeek reportedly used these chips to train its advanced R1 reasoning model, which gained attention in January for its impressive performance.
For now, Nvidia has declined to offer further comments on the situation.
