Nvidia (NVDA, Financial) recently revealed it must obtain U.S. government export licenses to sell its H20 chips to China, potentially leading to a $5.5 billion loss. The company has committed to adhering to the U.S. government's regulations concerning AI chip sales. Nvidia acknowledged that the U.S. government has the authority to direct what and where American companies can sell their products, and it will comply entirely with these directives.
The announcement led to a significant drop in Nvidia's stock price, which fell by 6.87% to $104.49, with further declines in after-hours trading. The H20 chip was launched following the Biden administration's 2022 restrictions on AI chip exports to China. Nvidia aims to support U.S. national security by generating employment opportunities, advancing technology leadership, boosting tax revenues, and addressing the trade deficit.
There is an ongoing U.S. investigation into whether restricted chips are being shipped from Singapore to China. Singapore is Nvidia's second-largest market, with sales nearly reaching $24 billion last fiscal year. Nvidia clarified that Singapore's revenue represents billing addresses in Singapore, typically subsidiaries of American clients, and products are generally shipped to the U.S. and Taiwan, not China.
