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Nvidia was surprised by Donald Trump’s new export controls on China’s top selling artificial intelligence chips. The chipmaker and its clients evaluated the damage caused by the US president’s latest salvo in an escalating trade war.
The 2.7-ton semiconductor giant revealed a $5.5 billion bill related to new US controls on sales to China on Tuesday night, but industry insiders believe Nvidia’s revenue hit could reach more than $10 billion.
US chip maker Intel told a Chinese client last week under Jensen Fan’s CEO that it will begin requesting licenses for some of its advanced artificial intelligence processors.
According to two people regarding the situation, Nvidia thought the H20 Graphics Processing Unit (GPU), a less powerful version of the AI chip designed to meet Washington’s previous export controls, could be exempt from the requirements.
After meeting with Trump at a Florida residence in Mar Arago earlier this month, Nvidia executives left the impression they could escape the tougher curb enforcement, people said.
This has led Nvidia to inform Chinese clients, including tech giants Alibaba, Bytedance and Tencent, that the H20 orders will not be affected, people said.
Nvidia has become blinded as Trump decided to crack down on H20 exports, which have relied on efforts by Chinese tech groups to challenge global peers to develop larger language models.
Annoyed Chinese tech companies have complained that there is not enough warning about such major policy changes, according to people with knowledge of recent debates, but they understand that the shift is beyond Nvidia’s control.
AI demand jumped to China as local companies began placing nearly $17 billion in orders for H20 chips this year after Deepseek successfully launched a low-cost inference model.
Nvidia usually takes more than six months to deliver such tips, but most orders from Chinese clients this year have not yet been met, and will likely be affected by the latest US restrictions.
The announced NVIDIA’s $5.5 billion blow is the cost of the material used to create penalties and operational costs associated with such orders, primarily to not provide on the basis of agreed terms. It is estimated that actual impacted revenues from China could be more than $10 billion.
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While China’s tech giants are competing to find an alternative to the H20, Trump’s new export control could significantly support sales of domestic manufacturers led by Huawei, which is pushing for producing more AI processors.
It also remains unclear how Chinese groups can apply for licenses to acquire H20, and how they will be issued.
Intel told Chinese clients last week that DRAM bandwidth of more than 1,400 gigabytes per 1,400 gigabytes is required if a chip needs a license to export to China. 1100 GB I/O bandwidth of 1 second or more. Or, according to the company email, the total is over 1700 GB per second. Intel’s Gaudi series and Nvidia’s H20 far outweigh these requirements.
Nvidia declined to comment. Intel, the White House and the US Department of Commerce did not immediately respond to requests for comment.
Additional Reports by Demetri Sevastopulo in Washington, DC
