Nvidia, a leading semiconductor company, announced on Tuesday that the U.S. government had blocked the sale of some of its artificial intelligence chips to China without a license and would require a license for future sales. This decision is the first major restriction imposed by President Trump’s administration on semiconductor sales abroad.
The restrictions pose a threat to Nvidia’s sales to China, which have been crucial for the company’s growth. In response to previous restrictions in 2022, Nvidia modified its A.I. chips to create a China-specific product, the H20. However, with the new rule in place, Nvidia will take a $5.5 billion charge against its revenue in the current quarter, affecting its strategic position in the market.
The change comes after Nvidia recently made promises to invest $500 billion in A.I. infrastructure in the United States. Despite winning praise from the White House, the company faced the new restrictions on sales to China. This decision is seen as a blow to Nvidia’s access to a key market, with Chinese companies potentially turning to Huawei for their A.I. chip needs.
Senator Elizabeth Warren has urged the Trump administration to act quickly in restricting the H20 chip, citing concerns about Chinese tech giants stockpiling the chips while U.S. start-ups and small businesses face shortages. The Trump administration has been focused on cracking down on U.S. support of Chinese A.I. companies since taking office.
Nvidia’s sales to China have declined in recent years due to U.S. government restrictions, making the country a smaller percentage of its total revenue. The company did not specify how the new licensing requirements would impact future sales, given its limited inventory of the H20 chip.
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