Nvidia gets export ban for AI chips: $5.5 billion loss
Nvidia announced it will face $5.5 billion in fees after the US government restricted the export of its new H20 AI chips to China. The American company’s share price fell, similar to AMD, which is also struggling with the same embargo on its MI308 chip.
The US Department of Commerce is “committed to acting pursuant to the President’s directive to protect our national and economic security,” said a spokesperson for the department, which oversees US export controls. The H20, the AI chip in Nvidia’s portfolio, was developed for customers in China, where the AI industry is booming. Companies that have increased their orders for the H20 include Tencent, Alibaba, and ByteDance, all major Chinese corporations.
The Nvidia H20 is less powerful than certain other chips intended for markets outside of China because it focuses primarily on inference, the speed at which AI models produce answers. Nvidia has already adapted the chip architecture in response to the bans and restrictions imposed by the previous Biden administration, but it appears that these efforts are no longer relevant.
US government fears Nvidia H20 supercomputer
The US government has pointed to a risk regarding the use of H20 chips in supercomputers. Although the chip has reduced computing power, high speeds could still be achieved by building H20 clusters. A bipartisan think tank in Washington, D.C., reported that Tencent has already used H20 chips to train its model, which could circumvent the export ban and primarily benefit Chinese companies.
Nvidia announced on Tuesday that the government had informed the company that the H20 chip required a license for export, clarifying a few days later that these regulations would remain in place indefinitely.
The $5.5 billion fee on H20 products relates to inventory, purchase commitments, and related reserves. Reuters noted that this news followed the company’s announcement that it plans to build $500 billion worth of AI servers in the United States over the next four years, in line with the Trump administration’s push for local manufacturing.
Nvidia also unveiled the new RTX 5060 and 5060 Ti graphics cards today.
