The Biden administration’s latest chip export restrictions have delivered a crushing blow to Nvidia’s carefully laid plans for the Chinese market. The company’s H20 processor, designed specifically to navigate previous trade restrictions while serving Chinese AI customers, has now been effectively banned, leaving Nvidia with no viable products for the world’s second-largest economy.
This development represents more than just a product setback for the chip giant. CEO Jensen Huang revealed that Nvidia has already written off $15 billion in potential Chinese revenue, a decision that comes as the company estimates the Chinese AI market at $50 billion for the coming year. The H20 chip was meant to be Nvidia’s bridge to this massive opportunity, carefully engineered to comply with existing regulations while still delivering competitive AI performance.
Wednesday’s earnings report will reveal the full extent of the damage, with $5.5 billion in charges already confirmed. Despite projected first-quarter revenue growth of 66.2% to $43.28 billion, the loss of Chinese business threatens to erode Nvidia’s historically strong profit margins by as much as 12.5%. Analysts from Wedbush estimate the restrictions could reduce quarterly revenues by $3-4 billion, underscoring how geopolitical tensions are reshaping the global semiconductor landscape.