Nvidia Faces $5.5 Billion Hit Amid U.S.-China Export Licenses

Nvidia plans to take a $5.5 billion charge after U.S. requires export licenses for its H20 AI chip to China. The chip is central to Nvidia's strategy for China's AI market, sparking concerns about its supercomputing applications. Nvidia is also planning significant AI server investments in the U.S.

Nvidia is set to incur a $5.5 billion charge following the U.S. government's mandate that export licenses are required for its H20 artificial intelligence chip sales to China. The H20, a key component in Nvidia's China strategy, faces scrutiny due to its potential use in supercomputing applications.

The U.S. government aims to prevent advanced technology from aiding China's rapid AI developments, prompting Nvidia to design chips meeting export rules while still catering to China's demand. Despite their lesser speed in training AI models, H20 chips are still effective at inference, a growing part of the AI chip market.

Concerns over H20's potential for building supercomputers lead to sales restrictions, with the Institute for Progress noting potential breaches by Chinese firms. While Nvidia explores expansion with a $500 billion AI server project in the U.S., the company awaits clarity on obtaining the necessary export licenses.

(With inputs from agencies.)