US requires licences for Nvidia H20 exports to China, forcing $4.5bn charge

The US government told Nvidia on 9 April 2025 that its H20 chip — a cut-down accelerator Nvidia had designed specifically to comply with earlier export limits and remain sellable in China — would now require an individual export licence for sale to China, Hong Kong, Macau and a group of other restricted destinations, on the grounds that the chips risked diversion to Chinese supercomputing projects. Five days later the government told Nvidia the requirement would apply indefinitely.

Nvidia’s Form 8-K, filed to disclose the news, estimated the hit at up to approximately $5.5 billion in charges against first-quarter inventory, purchase commitments and related reserves. When Nvidia reported its first-quarter fiscal 2026 results roughly three weeks later, the realised charge came in lower, at $4.5 billion, reflecting H20 inventory and purchase obligations that could no longer be sold. The company said it had recognised $4.6 billion in H20 sales before the restriction took effect but was unable to ship a further $2.5 billion of orders already in the pipeline, and it guided toward an additional roughly $8 billion in lost second-quarter H20 revenue because of the licensing requirement. Chief executive Jensen Huang later put the cumulative cost of the restriction at about $15 billion in foregone China sales, calling the ban “deeply painful.”

The measure reversed a policy the Trump administration itself had shaped: the H20 had been designed to Biden-era export limits specifically to remain legal for the China market, and the new licence requirement effectively closed that opening. It marked a tightening point in a period of export policy that fluctuated over the following months — the licence requirement was eased again later in 2025 — and made explicit that Nvidia’s China revenue was now a function of shifting government policy rather than product design.