Nvidia Faces $5.5 Billion Hit Amid U.S. Export Restrictions on AI Chips to China

Nvidia will take $5.5 billion in charges due to U.S. restrictions on exporting its H20 AI chip to China. This has affected Nvidia's market presence in China, where firms like Tencent and Alibaba show strong demand for AI chips. U.S. restrictions aim to keep advanced technology away from China.

Nvidia announced a $5.5 billion charge after the U.S. limited H20 AI chip exports to China, a major market. This move is part of broader efforts to maintain U.S. tech superiority in AI.

Nvidia's stock dropped by 6% in after-hours trading. Key Chinese tech firms previously ordered H20 chips. Although slower at AI training compared to other Nvidia chips, the H20 excels at inference, an expanding market domain.

The U.S. aims to prevent H20 chips' potential use in supercomputing in China. Nvidia reported the requirement of export licenses for the H20, effective indefinitely. Uncertainty remains over future licenses.

(With inputs from agencies.)