The U.S. government imposed export restrictions on Nvidia H20 AI chip technology which resulted in a $5.5 billion revenue loss for the company. The H20 AI chip gained rapid popularity among Chinese tech companies including Tencent Alibaba and ByteDance for their low-cost AI model development needs.
The H20 AI chips maintained their importance for inference tasks despite their lower performance compared to global Nvidia offerings in the AI chip industry. The U.S. government identified the H20’s fast memory chip connection because it suspected the technology could be adapted into supercomputers that Washington seeks to prevent China from developing.
The U.S. government notified Nvidia that H20 exports to China now need a license and this restriction will stay in place forever. The regulatory action was taken because DeepSeek and other Chinese firms might use H20 chips to build supercomputing systems which could break export regulations.
The stock price of Nvidia dropped by 6% during the after-market hours. The $500 billion AI server expansion in the U.S. by Nvidia demonstrates the company’s response to geopolitical risks from the U.S.-China tech competition.
