Nvidia said Tuesday that the US government will sell some of its artificial intelligence chips to China without a license and require a license for future sales.
The limit is the first major restrictions President Trump's administration has made to sell semiconductors overseas. This would put an end to the contracted business as Nvidia's sales to China could evaporate in the coming months, and the US has curbed the export of chips to its geopolitical rivals.
Nvidia has fought hard to maintain sales to China in the face of rising US government restrictions. In 2022, the Biden administration imposed rules that curb Nvidia's highest AI chip exports to China. Nvidia responded by changing the H100, one of its main AI chips, to ensure its capabilities fall below the US government's threshold. The resulting H20 chip has become a product unique to China.
NVIDIA will be billed $5.5 billion against current quarterly revenues due to H20 inventory, purchase commitments and related reserves.
Writes are a bigger strategic blow than financial ones. Nvidia dominates the market for semiconductors used to build artificial intelligence systems and is considering selling chips to China, which is essential for its future. If they left the market, they would entrust sales to Huawei, the leading Chinese AI chip manufacturer, and feared that Huawei would start challenging it for sales around the world.
“This will kill Nvidia's access to key markets and lose traction within the country,” says Patrick Moorhead, a technology analyst at Moor Insights & Strategy. “Chinese companies simply switch to Huawei.”
Nvidia declined to comment. The company's share price fell more than 5% in after-hours trading on Tuesday.
Commerce Department spokesman Benno Kass said Tuesday that the government is issuing new export licensing requirements for NVIDIA H20. Chip from advanced micro devices, MI308. And their equivalents.
“The Commerce Department is committed to acting on the President's directive to protect our national and economic security,” Kass said.
Nvidia revealed changes to regulatory filings on Tuesday, a day after winning the White House praise for its commitment to invest $500 billion in US AI infrastructure. The company said it would start manufacturing servers at its Houston plant and work with an Arizona-based chip packaging company.
However, those promises said in a regulatory submission that after the Trump administration notified NVIDIA on Wednesday, it would begin requesting China for licenses to sell to AI chips. The company said Tuesday that the Trump administration followed up on the notice and said the licensing requirements “will be effective for an indefinite future.”
The change comes weeks after Nvidia CEO Jensen Huang met with Trump at a $1 million Mar-a-Lago dinner per person. The meeting sparked reports that the US government would step back plans to restrict Nvidia sales to China.
In a letter sent to Commerce Secretary of Commerce Howard Lutnick on Monday, Sen. Elizabeth Warren, Democrat of Massachusetts, urged the Trump administration to act quickly to limit H20, saying Chinese tech giants like Tencent, Alibaba and Bytedan are scrambling to stockpile chips. These sales were happening because US startups and small businesses couldn't get as many tips as they wanted, she said.
“The Commerce Department cannot further delay the implementation of necessary and urgent actions against H20 to protect the national security of the United States,” she writes.
Since Trump took office, his administration has pledged to crack down on the support of the US for Chinese AI companies. Chinese startup Deepseek rattles Washington in the last few months that released a new AI system that US companies said was created for a small portion of the cost they were spending training artificial intelligence.
During the nomination hearing, Lutnick said the US should stop letting Chinese companies use American technology, including “to compete with us.”
Last year, Nvidia reported $17 billion in sales to China. The company's operations are contracted as a total percentage of revenue in the face of US government restrictions. Sales to China, which was about a fifth of Nvidia's revenue in 2023, fell to 13% last year.
In the filing, NVIDIA did not say whether the licensing requirements would affect future sales. Analysts say that stock is limited because H20 chips are created by slotting the performance of the H100 chip. You can sell unmanaged H100 chips by US and European companies.
Anna Swanson Contributed with a report from Washington.
