Nvidia didn’t warn customers about US chip clampdown: Reuters
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More news: According to sources cited by Reuters, chip giant Nvidia kept some of its customers in the dark about impending US export licencing rules which will impact its sales in international markets including China.
Nvidia disclosed on Tuesday that US officials had informed the company on April 9 that its H20 chip would require an export licence for sales to China, adding that it would take a charge of around US$5.5 billion ($8.7 billion) related to “inventory, purchase commitments and related reserves” for the H20 line.
Despite knowing about the incoming rules for over a week, sources told Reuters that major Chinese cloud companies were still anticipating the H20 deliveries by the end of 2025 and were not made aware of the new rules by Nvidia. China sales teams also did not appear to be informed ahead of the public announcement.
China is one of Nvidia’s largest markets, and the new export rules could jeopardise its footprint in the market, opening a door for key competitors like Huawei to fill supply holes.
Shares in Nvidia fell as much as 7.1% in pre-market trading on Wednesday, contributing to a 1.3% declines in Nasdaq 100 futures.
Nvidia says new US licence rule on H20 exports triggers US$5.5bn charge
The news: Nvidia said Tuesday it will take a charge of about USD5.5 billion ($8.7 billion) tied to its H20 graphics processing units after the US government informed the company it will require a licence to export the chips to China and a handful of other countries.
The notice was received 9 April and the US government informed the company on 15 April the requirement will be in effect “for the indefinite future,” Nvidia said in a regulatory filing.
The charges are related to “inventory, purchase commitments and related reserves” for the H20 line.
The context: The H20, Nvidia’s primary chip legally permitted for sale in China, was designed to meet previous US restrictions and generated an estimated USD12 billion to USD15 billion in 2024, CNBC noted.
The Biden administration restricted AI chip exports to China in 2022 and updated the rules in 2023 to block more advanced processors. Additional restrictions under “AI diffusion rules”, first proposed by the Biden administration, will apply starting next month.
The numbers: Nvidia shares fell almost 5% in extended trading after the filing. Nvidia reports fiscal first-quarter results on 28 May.
The sources: Nvidia filing, CNBC, Reuters
