The US imposes new restrictions on Nvidia for chip exports. A billion-dollar investment in the production of scaled-down GPUs tailored to earlier sanctions is at risk of becoming useless.
The US government is hitting American chip giant Nvidia hard in the wallet. New rules restrict the export of the H20 GPU. Its export will now be subject to licenses. The Nvidia H20 is a kind of light version of the globally available GPU range. Nvidia developed the chip specifically for China, taking into account previously imposed export restrictions. The H20 thus has capabilities that remain just below the threshold of export restrictions imposed by President Biden.
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China is an important export market, so Nvidia found it worthwhile to invest in a chip that it could export freely without violating American trade rules. The Trump administration is now tightening these rules, essentially rendering the entire concept of the H20 useless.
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The US fears that China can still use the H20 to develop AI models or power supercomputers. DeepSeek, for example, reportedly used clusters of H20 chips to build its own LLM. According to the US, the H20 thus remains too powerful, prohibiting China from purchasing the chips. The ban on the free export of the Nvidia H20 will cost the company about $5.5 billion in the coming quarter.
Nvidia’s stock took a small dip after the news was announced. The company’s stock price has been on a downward trend since Trump came to power in the US and started his trade war with the world. The situation is similar for AMD. That chip manufacturer also has to comply with new export restrictions, seeing $800 million evaporate.