U.S. export crackdown triggers $5.5B hit for Nvidia, rattles ASML forecasts

Nvidia said Tuesday it would take a $5.5 billion hit after the U.S. government imposed new export restrictions on its H20 artificial intelligence chip — a move that not only threatens the company’s China strategy but also deepens the geopolitical rift shaping the future of the semiconductor industry.

The H20, Nvidia’s most advanced AI chip legally permitted for sale in China, will now require a special license for export, according to the U.S. Commerce Department. The restrictions, which went into effect April 14 and are indefinite, aim to block chips with high memory and connectivity capabilities that officials believe could be used in supercomputers.

Nvidia CEO Jensen Huang.

The new rule caught some of Nvidia’s biggest Chinese clients—including Tencent, Alibaba, and ByteDance—by surprise. Sources familiar with the matter said Nvidia's own China sales team had not been briefed in advance. Many customers were still expecting deliveries by year’s end.

The abrupt action reflects growing U.S. concern that even "compliant" chips like the H20, despite their lowered compute power, could be repurposed for sensitive applications. The Washington-based Institute for Progress argued this week that the chips are already being used in installations likely in breach of existing restrictions, pointing to facilities run by Tencent and startup DeepSeek.

Nvidia said the $5.5 billion in charges would cover inventory, purchase commitments, and related reserves tied to the H20. The company declined to comment beyond its filing. Shares fell 6% in after-hours trading.

The fallout from Washington’s expanding export controls was felt beyond Nvidia. AMD, whose MI308 chip was also named in the restrictions, saw its stock fall 7%. And in the Netherlands, semiconductor equipment maker ASML warned on Wednesday that recent tariff announcements had injected new uncertainty into its 2025 and 2026 outlook.

ASML, a crucial supplier of chipmaking tools to global giants like Nvidia and Apple, said its net bookings missed forecasts in the first quarter. Although it stood by its annual guidance, CEO Christophe Fouquet noted that tariffs had become a “macro” risk, complicating everything from equipment shipments to material imports.

ASML’s CFO, Roger Dassen, broke down the potential impact in an internal interview: tariffs could disrupt shipments to the U.S., raise costs on imported tools, and trigger retaliatory measures from other countries. Perhaps most worrying, he said, was the indirect drag on global economic growth.

Industry estimates cited in recent reports suggest that tariffs could cost U.S. semiconductor equipment makers over $1 billion a year. ASML’s shares dropped 7% on Wednesday, positioning them for their worst single-day performance since January.

Meanwhile, Nvidia faces a profound strategic setback. Since Washington banned exports of its top-tier AI chips to China in 2022, the H20 had become its flagship workaround. The company had secured $18 billion in H20 orders since the start of the year. In its last fiscal year, China generated $17 billion for Nvidia—about 13% of its total revenue.

Now, with the H20 essentially grounded, U.S. regulators may have handed an opportunity to Huawei, which offers a domestic alternative to Nvidia’s AI hardware. “Restricting the H20 system is effectively pushing Nvidia’s Chinese customers toward Huawei’s AI chips,” said Nori Chiou, investment director at White Oak Capital Partners.

On Monday—just a day before the $5.5 billion charge was announced—Nvidia said it planned to build AI servers worth up to $500 billion in the U.S. over the next four years. That effort, supported by partners including TSMC, aligns with the Trump administration’s push for local manufacturing. But the contrast between U.S. incentives at home and aggressive controls abroad underscores a new era of bifurcated growth—one that is forcing companies like Nvidia and ASML to bet on resilience in an increasingly fragmented world.