US chip giant Nvidia is preparing to take a $5.5 billion hit after Donald Trump’s administration announced there will be tightening export rules for AI chips to China.
Government officials told Nvidia the stricter rules were to prohibit the possibility of its technology being used in potentially dangerous AI models in China.
The US had already had export controls on AI chips to China, which forced Nvidia – widely seen as the leading global AI chip manufacturer – to create a ‘special’ AI chip specifically for the Chinese market.
This H20 AI chip no longer complies with export rules and will now need a special license to sell in the region.
Nvidia has said the new rules will likely cause a $5.5 billion dip, which it prepares to report in its quarterly financial report ending 27 April.
Nvidia’s shares suffered a six percent fall after the announcement, with other AI semiconductor businesses experiencing a similar fall.
Earlier this year, Nvidia suffered a major market cap crash of $600 billion when Chinese tech start-up DeepSeek revealed its R1 chatbot model, that rivalled US competitors like OpenAI’s ChatGPT and sent shockwaves through global tech markets.
The new export rules come shortly after the US government introduced international tariffs on goods coming from other countries.
On a long list of tariffed countries presented at the White House, a 10 percent tariff on UK imports was announced, as well as a 34 percent tariff on goods coming from China. Although, many of these tariffs were suspended last week.
