Nvidia announced on Tuesday that the company would face a $5.5 billion charge after the U.S. government restricted exports of its H20 artificial intelligence chip to China, a significant market for Nvidia. The H20 is one of Nvidia’s most advanced chips available in China, and this decision follows U.S. efforts to maintain an edge in the global AI race.
The U.S. Commerce Department has issued new licensing requirements affecting exports of chips including models from Nvidia and AMD. Both companies experienced a drop in share prices with Nvidia down by approximately 6% and AMD by 7% in after-hours trading on Tuesday.
Nvidia’s CEO Jensen Huang has emphasized the importance of the company’s technology in the rise of AI, notably in inference tasks. Despite some limitations, the H20’s connectivity capabilities raise concerns about its potential use in building supercomputers in China, leading to the U.S. export restrictions. Future license approvals for these chips remain uncertain while Nvidia has committed to expanding AI servers domestically.
(With inputs from agencies.)
