By Adam Levine and Adam Clark
Nvidia and Advanced Micro Devices are the latest firms caught in the escalating trade war between the U.S. and China.
Nvidia disclosed in an SEC filing Tuesday evening that future sales of its H20 AI accelerators to China would require a license from the U.S. Department of Commerce. Those licenses are unlikely to be forthcoming.
As a result, Nvidia will take a $5.5 billion charge in the first quarter of fiscal year 2026, the current quarter, for H20 inventory and canceled sales.
Nvidia stock ended Wednesday down 6.9% at $104.49. Shares are down 30% from their all-time closing high of $149.43, reached on Jan. 6, according to Dow Jones Market Data. Nvidia -- the third-largest company by market capitalization -- shed $188 billion in market value today.
AMD stock ended the day down 7.4% after the chip maker said in a similar filing Wednesday that it would book up to $800 million in charges related to the so-called export control, which applies to its MI308 chips. It will apply for licenses to sell those products to China, but said "there is no assurance that licenses will be granted."
The news weighed on the chip sector and stocks more broadly, with the Nasdaq Composite down 3.1% and the iShares Semiconductor exchange-traded fund down 3.9%.
Nvidia's H20 chip is a less powerful version of Nvidia's market-leading AI accelerators designed for the Chinese market. It is still very powerful. These chips can work together over high-speed connections. If a Chinese company or government entity could put enough of them together, it may be able to build a supercomputer that might rival the largest in the world. The U.S. Department of Energy uses its supercomputers to simulate nuclear tests and war, and so one in China may pose a national security threat.
In fiscal 2025, 13% of Nvidia's sales were from billing addresses in China, down from 26% in fiscal 2022, before the U.S. federal government began to take an interest in Nvidia's Chinese customers.
In 2022, the Biden administration banned sales of full-powered Nvidia hardware in China, but allowed it to sell a version with limited capabilities. Now, even that is proscribed.
The impact of the limits could mean Nvidia won't be able to recognize around $10 billion in revenue, according to Jefferies analyst Blayne Curtis.
"We don't know when that lost revenue was to be recognized but we could see a headwind of $5 billion in the July quarter (vs April). Sentiment was already fairly low for the July quarter given concerns that the GB200 [Nvidia chip] ramp continues to be slow but this new headwind makes sequential growth much more difficult," Curtis wrote in a research note on Tuesday.
This has been a whipsaw week for Nvidia's relationship with the Trump administration. Nvidia received the export restriction notification on April 9, and then on Monday announced with the administration $500 billion in domestic investment. The figure is mostly comprised of the U.S. capital expenditures of Nvidia customers like Amazon, Microsoft and Google, but also includes an U.S. assembly plant for Nvidia AI servers.
When asked for additional details, Nvidia said it has nothing to add beyond the filing.
Write to Adam Levine at adam.levine@barrons.com and Adam Clark at adam.clark@barrons.com
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April 16, 2025 16:46 ET (20:46 GMT)
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