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Stock down 6.5%, Nasdaq futures down 1.5%.
By Wolf Richter for WOLF STREET.
Nvidia disclosed in a filing with the SEC that it expects to charge up to $5.5 billion against earnings in its fiscal Q1 due to what would amount to a US government export ban to China of its H20 GPU, the chip it specifically designed for China to comply with the export restrictions imposed by the Biden administration on its most advanced chips. The government has said that the chips can be used in supercomputers for China’s military.
The H20 GPU, based on the Hopper architecture released in 2022, has slower interconnection speeds and bandwidth than the H100 and H200 GPUs sold in the US and other countries. The latest generation of its AI chips is the Blackwell GPU, introduced in 2024, which is not for sale in China.
DeepSeek, which had shaken up markets earlier this year when it released its AI model R1, used H20 GPUs.
The charge would be “for inventory, purchase commitments, and related reserves” in China, Nvidia said.
Nvidia’s shares plunged 6.5% afterhours, to $104.93, down by 31% from its all-time high last June. Nasdaq futures dropped by 1.6%, S&P 500 futures by 1.0%.
The filing was devoid of details:
“On April 9, 2025, the U.S. government, or USG, informed NVIDIA Corporation, or the Company, that the USG requires a license for export to China (including Hong Kong and Macau) and D:5 countries, or to companies headquartered or with an ultimate parent therein, of the Company’s H20 integrated circuits and any other circuits achieving the H20’s memory bandwidth, interconnect bandwidth, or combination thereof.
“The USG indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China. On April 14, 2025, the USG informed the Company that the license requirement will be in effect for the indefinite future.
“The Company’s first quarter of fiscal year 2026 ends on April 27, 2025. First quarter results are expected to include up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves.”
The disclosure today came six days after the government had informed Nvidia on April 9 about the export license requirement.
The write-down may be in part for inventory of H20 GPUs that can no longer be sold in China and for purchase orders that can no longer be met.
The portion of China sales in Nvidia total sales has already been declining due to export restrictions. Analysts at Bernstein had estimated last month before the export restrictions were tightened that sales to China would decline to about 13% of Nvidia’s total revenues in fiscal 2025, down from a share of 17% in 2024, and down from a share of 26% in 2022, before export restrictions by the US government kicked in.
China was Nvidia’s fourth-largest region by sales last year, after the US, Singapore, and Taiwan, according to Nvidia’s annual report. It listed China’s Huawei as a competitor for the second year in a row, indicating that its GPUs are becoming competitive with some of Nvidia’s products.
The disclosure is another indication that Nvidia’s revenue growth will slow further. And that’s not a good signal for a stock price that was catapulted into the stratosphere by AI mania during which Big Tech rushed to buy Nvidia’s GPUs and pay whatever for them.
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The post Nvidia Makes Mess Afterhours, Discloses $5.5 Billion in Charges due to US Export Restrictions on its H20 Chip for China appeared first on Energy News Beat.
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