Nvidia says it will record $5.5 billion quarterly charge tied to H20 processors exported to China


Nvidia Says It Will Record $5.5 Billion Quarterly Charge Tied to H20 Processors Exported to China

April 15, 2025 — By [Author's Name]

Nvidia, the world’s leading designer of graphics processing units (GPUs) and artificial intelligence (AI) chips, announced it will take a $5.5 billion charge in the upcoming quarter tied to its H20 processors exported to China, a stark development reflecting the ongoing impact of U.S. export restrictions on advanced semiconductor technologies.

The company disclosed the impending charge in a regulatory filing on Monday, noting that it relates primarily to inventory adjustments and write-downs of its H20 AI chips—one of the tailored products developed specifically to comply with tightened U.S. export controls to China.

The H20, launched in late 2024, was designed to provide Chinese customers with AI processing power while adhering to the U.S. Commerce Department’s restrictions. These regulations aimed to prevent the transfer of cutting-edge semiconductor technologies that could potentially advance China’s military and surveillance capabilities. However, recent shifts in enforcement and broader geopolitical tensions have further constrained Nvidia’s ability to sell even these downgraded chips.

“We had developed the H20 as a compliant solution for our Chinese customers, but evolving export policies and customer demand have rendered a significant portion of our inventory unsellable,” Nvidia said in a statement. “As a result, we will record a charge of approximately $5.5 billion in the first fiscal quarter of 2026.”

Export Restrictions Crimp Growth

The announcement comes amid growing scrutiny over U.S. tech exports to China. In 2023 and 2024, Washington tightened controls on high-performance semiconductors and related technologies, significantly affecting U.S. chipmakers like Nvidia and AMD. Despite adapting its product line to comply with these mandates, Nvidia has faced an uphill battle balancing regulatory compliance with the needs of one of its largest foreign markets.

China accounted for roughly 20-25% of Nvidia’s data center revenue prior to the implementation of the stricter controls. With the latest restrictions taking effect in late 2024, analysts had anticipated potential disruptions—but the scale of the H20 charge took many by surprise.

“This is a material hit for Nvidia,” said Daniel Ives, managing director at Wedbush Securities. “It underscores the increasing difficulty for U.S. semiconductor firms to navigate the rapidly changing U.S.-China tech landscape.”

Looking Ahead

Despite the charge, Nvidia reaffirmed its long-term confidence in global AI demand. The company continues to dominate the AI chip market, fueled by booming demand from cloud providers, hyperscalers, and enterprises investing in generative AI, robotics, and machine learning.

“Our fundamentals remain strong,” the company said. “While we are adjusting our near-term outlook to account for this charge, we remain focused on delivering innovation that powers the AI transformation globally.”

Shares of Nvidia dipped 3.2% in after-hours trading following the announcement but remain up over 45% year-to-date, buoyed by surging demand for its flagship H100 and newly released Blackwell B200 chips in markets unaffected by the export curbs.

Industry analysts expect Nvidia to increasingly pivot its China strategy toward software solutions, licensing models, and partnerships that may not be subject to the same export restrictions. However, with U.S.-China tech tensions showing no signs of abating, the road ahead remains uncertain.

Contact: orlowskifinancialcounsel@proton.me | Twitter: @SteveO_Writer
Disclosure: The author does not hold a financial interest in Nvidia at the time of publication.

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