Nvidia Faces $5.5 Billion Revenue Hit from U.S. Export Restrictions to China

Nvidia, a leading AI chipmaker with over 80% of the AI data center market, is at the center of escalating tensions between the U.S. and China, as new U.S. export restrictions now require special licenses for shipments of advanced chips to China. These restrictions, which also affect AMD, have resulted in Nvidia taking a $5.5 billion revenue hit due to unsellable inventory, particularly impacting its H20 chips and leading to a significant drop in its share price. The U.S. policy aims to limit China's access to critical AI technology, but analysts warn that it could backfire by driving up costs, slowing domestic AI investment, and allowing Chinese companies like Huawei to fill the gap. Historically, Nvidia relied on Chinese tech giants such as Tencent and Alibaba for about a fifth of its revenue, highlighting the importance of the Chinese market. In response to these challenges, Nvidia is shifting focus toward domestic manufacturing, with plans to invest heavily in U.S. AI infrastructure. The situation underscores the complex interplay of technology, economics, and geopolitics shaping the future of AI innovation.