US export controls have increasingly been used to block the sale of advanced chips to China as competition between the world’s two leading economies has intensified, especially in the field of AI.
Nvidia has been designing chips that comply with these restrictions but is now confronted with new licensing requirements for exports of chips that cover not only its H20 device but also AMD's MI308 chip.
The H20 is Nvidia’s most advanced chip that’s available for sale in China and is central to its efforts to stay engaged with its fast-growing AI industry. Demand from some of China’s leading tech companies for the chip has been ramped up as demand for low-cost AI models has boomed. More than 13% of Nvidia's sales, worth around $17 billion, came from China in its last fiscal year.
The H20 chip is not as fast at training AI models as Nvidia's other chips, and which are available outside China, but it is highly competitive when it comes to inference, which is becoming the biggest part of the AI chip market.
The US government said that it was restricting H20 sales to China over concerns that the chips, and their memory and connectivity capabilities, could be used in building a supercomputer.
Reports have suggested that Tencent has installed H20s in a facility used to train a large model, breaching existing controls restricting the usage of chips in supercomputers exceeding certain thresholds.
The $5.5 billion in charges are associated with inventory, purchase commitments and related reserves.
Trump’s tariffs are also impacting companies like ASML, the world’s largest supplier of computer chip-making equipment, which has warned of increasing uncertainty around its outlook for 2025 and 2026.
According to ASML tariffs could have an impact on shipments directly to the United States, as well as on imported parts and tools and material imports needed for its manufacturing operations there.
According to Reuters, tariffs could cost US semiconductor equipment makers more than $1 billion a year, according to an industry calculation based on a discussion held with US officials.
