Nvidia and suppliers' shares slide after the chip designer said it expects $5.5 billion in charges linked to new export restrictions

• Nvidia said in a Tuesday SEC filing that it expects up to $5.5 billion in charges due to a new export rule.
• Nvidia fell over 6% after hours, while Asian suppliers such as TSMC fell on Wednesday morning.
• The Trump White House is eyeing tariffs on chips as a way to encourage onshore manufacturing.

Nvidia expects up to about $5.5 billion in charges as a result of the Trump administration's licensing requirement to export the company's H20 chips to China, according to a Tuesday evening SEC filing. The news sent shares of Nvidia and key suppliers down.

The chip designer said in the filing that the government informed Nvidia that the export rule would be "in effect for the indefinite future." Nvidia said the charges are expected to be reflected in the company's first-quarter earnings, which ends on April 27.

"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 company said in the filing.

The announcement caused Nvidia stock to slide more than 6% after trading hours.

In Asia, where the company's supply chain is concentrated, stocks of Nvidia suppliers declined as markets opened on Wednesday.

Japanese testing equipment maker Advantest dropped 5%. Shares of semiconductor wafer producers Samsung Electronics and TSMC fell 2.6% and 2%, respectively. Memory maker SK Hynix slumped 3% and testing and assembly company Wistron fell 2.8%.

In a note on Wednesday, Bernstein analysts said banning the H20 chip made "little sense" to them.

"H20 performance is low, well below already-available Chinese alternatives," analysts led by Stacy A. Rasgon wrote in the note. "A ban essentially simply hands the Chinese AI market over to Huawei."

According to Bernstein, China's H20 sales amounted to about $12 billion in revenue, which is "not trivial but not enormous in the grand scheme of things."

Nvidia's H20 chips were specifically made to comply with Biden-era export controls on chips sent to China as the world's superpowers remain in an AI arms race.

The current administration sees the new export rule as a means to address the risk of China developing its own supercomputer, the company said in the filing. The rule doesn't stop the export of H20 chips — but it requires Nvidia to get a license to export them.

A White House spokesperson did not respond to a request for comment and an Nvidia spokesperson declined to comment.

Where the charges come from

Exporting the H20 chips themselves isn't costing the company up to $5.5 billion.

According to the filing, the charges instead could include H20 chips that have already been manufactured and now may be more difficult to sell due to the new requirement. Nvidia is also accounting for costs related to producing the chip and additional funds that may be needed to cover potential future losses.

The Trump administration has taken steps to pave a way for tariffs on chips, including probes led by the Commerce Department into semiconductor imports. The investigations seek to determine what impacts those imports have on national security, which could give President Donald Trump a reason to implement tariffs on key tech goods.

In general, Trump has said that his tariff strategy is part of a broader effort to encourage domestic manufacturing of key goods. The president is also hoping to use the levies to push China to negotiate a better trade deal with the US, although the specifics around his demands are not clear.

On Monday, Nvidia reiterated its commitment to invest $500 billion over the next four years in the US, promising AI supercomputers and data centers.

The White House promoted the announcement as a win, calling it "the Trump Effect in action."