Trump's Chip Export Restrictions, Nvidia 'Drops' Over 6% After-hours
Nvidia's stock fell over 6% in after-hours trading on Tuesday following the U.S. government's implementation of new export restrictions on its H20 AI chips to China. The company announced it would incur a $5.5 billion charge in its fiscal first quarter due to unsellable inventory and canceled orders resulting from these restrictions .
The H20 chip, designed to comply with prior export controls, was the most advanced AI processor Nvidia could sell to China. However, the new mandate requires an export license for these chips, which analysts believe will not be granted, effectively ending Nvidia's ability to sell the H20 chip in China .
In response to the export restrictions, Nvidia plans to invest up to $500 billion in U.S.-based AI infrastructure, including the construction of AI supercomputers in Texas in partnership with Taiwanese contract manufacturers .
Despite these efforts, the immediate financial impact is significant, with the $5.5 billion charge reflecting the challenges Nvidia faces amid escalating U.S.-China trade tensions.
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