Nvidia Faces Billions in Revenue Loss Due to H20 Chip Licensing Requirements

Nvidia anticipates a significant financial setback due to recent chip-export restrictions imposed by the Trump administration. The company’s first-quarter earnings for fiscal year 2026, which concluded on April 28, reflect the initial impact of these regulations.

The chipmaker reported a $4.5 billion charge in Q1 stemming from licensing requirements that limit its ability to sell the H20 AI chip to Chinese companies. Nvidia also disclosed that it was unable to ship an additional $2.5 billion worth of H20 chips during the same period due to these restrictions.

Originally, when the U.S. licensing requirement was announced in April, Nvidia projected charges of $5.5 billion for Q1.

Looking ahead, Nvidia predicts an $8 billion revenue hit in Q2 due to the H20 licensing stipulations. This will affect its projected revenue of approximately $45 billion significantly.

During the company’s Q1 earnings call, CEO Jensen Huang stated that Nvidia is actively seeking alternative strategies to remain competitive in China’s AI market. However, the current restrictions necessitate a write-off for the H20 chips.

Huang emphasized the strategic importance of the Chinese market, stating, “China is one of the world’s largest AI markets and a springboard to global success with half of the world’s AI researchers based there; the platform that wins China is positioned to lead globally today. However, 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.”

Nvidia has been vocal in its opposition to the Trump administration’s efforts to restrict the export of U.S.-made AI chips, including those destined for China. Huang has also praised the administration’s recent reversal of Joe Biden’s Artificial Intelligence Diffusion Rule, which would have imposed even stricter chip-export limitations.

Despite Biden’s chip-export rules not coming to bear, Nvidia is feeling the pinch from restrictions intended to curb China’s access to advanced AI technology.

“The question is not whether China will have AI; it already does,” Huang commented. “The question is whether one of the world’s largest AI markets will run on American platforms. Shielding Chinese chip makers from U.S. competition only strengthens them abroad and weakens America’s position.”