Nvidia shares slid sharply on Wednesday after the chip giant revealed that newly tightened US export restrictions on its China-bound AI chips could cost it up to $5.5bn this quarter.
The move, part of an escalating series of trade and technology curbs between Washington and Beijing, has rattled markets already on edge over tariff uncertainty and growing geopolitical tensions.
Trump’s trade war bruises chip exports
A regulatory filing late Tuesday revealed that the US government had informed Nvidia on the 9th April that its China-focused H20 chip, designed to comply with prior restrictions, will now require an export license.
Nvidia’s H20 – a powerful GPU optimised for AI interference – is the most advanced AI chip the company can legally ship to China.
Nvidia disclosed the change publicly later on, catching even some of its major Chinese customers by surprise, Reuters reported.
Firms like Baidu, Tencent, and Alibaba, which had reportedly placed $16bn worth of H20 orders in Q1 alone, had been expecting shipments before year-end.
The US government has now made the licensing requirement indefinite, leading Nvidia to write down inventory, cancel commitments, and book the $4.4bn charge.
The H20 chip curbs come amid rising trade tensions. Last week, president Donald Trump raised tariffs on Chinese imports to 145 per cent, prompting Beijing to retaliate with 125 per cent duties on US goods.
Though some of Trump’s broader tariff measures were delayed by three months, markets remain anxious about the long-term trajectory.
The US action is the latest in a string of moves aimed at preventing China from accessing high-end AI hardware – critical in military and tech competition.
Nvidia takes a tumble
Nvidia’s stock plunged over six per cent in after hours trading Tuesday, leading Nasdaq futures down 1.1 per cent on Wednesday morning.
S&P 500 futures dropped 0.5 per cent, while Dow Jones futures were flat, showing the fallout’s concentration in tech.
Semiconductor peers AMD and Intel also traded lower in early markets, as did Dutch equipment giant ASML, which missed earnings expectations and dipped over six per cent.
“Export restrictions are the new weapon in the US-China rivalry, and Nvidia is caught in the crossfire”, said Russ Mould of AJ Bell. “The $5.5bn hit marks a new chapter in this tit-for-tat.”
David Morrison, senior analyst at Trade Nation, added: “Markets were fairly quiet before this, but Nvidia’s after hours shock has changed the tone. It looks like the eye of the storm, not the calm before it”.
Wider tech fall-out
In Asia, tech stocks mirrored the overnight panic. Hong Kong’s Hang Seng fell 2.2 per cent, while Japan’s Topix slipped more than one per cent.
China’s leading chip customers and suppliers stumbled amid fears that the US export squeeze could spread.
“This uncertainty is bad for everyone”, said Steve Clayton of Hargreaves Lansdown. “Nvidia’s restriction has created wider doubts about where the US-China trade relationship is heading”.
Ben Barringer, global tech analyst at Quilter Cheviot, noted the broader impact.
He said: “Nvidia’s licence requirement feeds down the supply chain to ASML and others. A $13bn revenue hit isn’t catastrophic, but it’s material- and it’s happening in a tough environment already burdened by volatility”.
Meanwhile, the White House’s trade stance remains unpredictable. Treasury secretary Scott Bessent is expected to meet with South Korea’s minister next week, while China named a new top trade negotiator, calling for more “respect ” from Washintgon before re-engaging in formal talks.
As one analyst put it, “this isn’t just a chip story – it’s a geopolitical story with a tech ticker symbol.”
