According to a new report by Reuters, Nvidia failed to inform its China-based customers about the recent US chip export restrictions. The giant chip manufacturer was reportedly informed on April 9 that it needs an export license to sell H20 chips to China but withheld the news from its Chinese customers.
China is one of the biggest buyers of Nvidia chips, accounting for 13 percent of Nvidia's total sales in the last fiscal year. Since the start of the year, Nvidia has also secured $18 billion worth of H20 orders from Chinese companies. Two sources told Reuters that Nvidia's Chinese customers still expected H20 Chip deliveries by year-end and were left unaware of impending restrictions.
Nvidia said Tuesday that it would take $5.5 billion in charges following the US government restriction on exporting H20 chips to China. The company's shares also dwindled by 6 percent after the announcement.
The H20 chip was designed in 2023 after the US government banned sales of H800 variants to China. It is meant to be less powerful than Nvidia's top-of-the-line products, which are used to train AI models. Despite this, the H20 is highly demanded among Chinese companies, which are striving to access more chips for their growing AI industry.
Nvidia now finds itself in a challenging position, requiring an export license from the Commerce Department to sell China-focused H20 chips to its Chinese customers. Amid the ongoing trade and tariffs war between Washington and Beijing, US officials are concerned that these chips might be used by China to build supercomputers.
However, the H20 chip is not the only chip impacted by the recent restrictions. According to the US Commerce Department, AMD's MI308 chip and other equivalents also need export licenses to be sold to Chinese customers. AMD says recent curbs on chip exports would damage the company by $800 million.
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