The United States government has imposed indefinite export restrictions on Nvidia’s H20 artificial intelligence chips to China, citing national security concerns.

The H20 chip, tailored for the Chinese market, was previously exempt from earlier bans. Nvidia disclosed that the new restrictions will result in a $5.5 billion charge for the first quarter of fiscal year 2026,

The U.S. Department of Commerce mandates that Nvidia obtain a license for each H20 chip shipment to China, Hong Kong, and Macau.

The license requirement is set to remain in effect indefinitely. The H20 chip’s high-speed connectivity capabilities have raised concerns about its potential use in supercomputers, prompting the restrictions. ​

Chinese technology companies, including Tencent, Alibaba, and ByteDance, had significantly increased orders for H20 chips to support AI models developed by startups like DeepSeek. The export ban is expected to disrupt these companies’ AI development plans.

In response to the export restrictions, Nvidia announced plans to invest in domestic manufacturing by building AI supercomputers in Texas. This move aligns with the U.S. administration’s initiative to bolster domestic semiconductor production. ​

The export ban has also impacted Nvidia’s stock performance, with shares declining approximately 6% following the announcement. The broader tech sector experienced similar declines amid concerns over escalating U.S.-China trade tensions.

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