As Nvidia reports earnings for the first quarter of its fiscal year 2026, which closed on April 28, the company has released numbers on how the Trump administrationโs recent chip-export restrictions are affecting business.
Nvidia reported that it incurred a $4.5 billion charge in Q1 due to licensing requirements impacting its ability to sell its H20 AI chip to companies in China. The chipmaker also reported that it was unable to ship an additional $2.5 billion of H20 revenue in the quarter due to the restrictions.
When the U.S. licensing requirement was originally announced in April, the company said that it expected $5.5 billion in related charges for Q1.
Nvidia also said Wednesday that the H20 licensing requirements will result in an $8 billion hit to the companyโs revenue in Q2, which is predicted to be around $45 billion โ a significant toll.
In the companyโs Q1 earnings call, CEO Jensen Huang said that the company is currently exploring ways to still compete in Chinaโs AI market but that, for now, it has to take a write-off for its H20 chips.
โChina is one of the worldโs largest AI markets and a springboard to global success with half of the worldโs AI researchers based there; the platform that wins China is positioned to lead globally today,โ Huang said. โHowever, the $50 billion China market is effectively closed to us. The H20 export ban ended our Hopper data center business in China. We cannot reduce Hopper further to comply.โ
The company has been outspoken against the Trump administrationโs push to limit the export of U.S.-made AI chips to countries, including China. Huang praised the administrationโs recent decision to scrap Joe Bidenโs Artificial Intelligence Diffusion Rule that would have imposed further chip-export restrictions.
Despite Bidenโs chip-export rules not coming to bear, Nvidia is clearly not immune to the Trump administrationโs attempt to stifle Chinaโs AI market.
โThe question is not whether China will have AI; it already does,โ Huang said. โThe question is whether one of the worldโs largest AI markets will run on American platforms. Shielding Chinese chip makers from U.S. competition only strengthens them abroad and weakens Americaโs position.โ
This piece has been updated to include commentary from Nvidiaโs earnings call.
