Nvidia expects $5.5 bn hit as US targets chips sent to China

Core Insights - Nvidia faces a new US licensing requirement for exporting its H20 graphics processing units (GPUs) to China due to concerns that these chips may be used in supercomputers [2][3] - The company anticipates a financial impact of approximately $5.5 billion in the current fiscal quarter due to this licensing requirement, which affects inventory, purchase commitments, and related reserves [5][4] - The licensing requirement for H20 chips is expected to last indefinitely, adding to the existing restrictions on Nvidia's most advanced GPUs tailored for artificial intelligence [4][6] Financial Impact - Nvidia expects to incur charges of up to $5.5 billion in the first quarter results related to H20 products [5] - The current fiscal quarter for Nvidia ends on April 27, which may reflect the immediate financial consequences of the new licensing rule [4] Market Reaction - Following the announcement of the licensing requirement, Nvidia's shares experienced a decline of over 6% in after-market trading [3] - The overall market has shown volatility since the announcement of tariffs by US President Donald Trump, with a sharp decline followed by a partial recovery due to a temporary pause on tariff increases [7] Strategic Context - Nvidia's CEO has emphasized the company's commitment to balancing legal compliance with technological advancements, despite the challenges posed by US-China trade tensions [6] - The US government views China as a strategic competitor in technology, leading to restrictions on the sale of advanced AI chips to the country [6]