Nvidia Corporation, the world’s largest maker of semiconductor chips, dominates the AI technology landscape. Right now, it’s on the ropes from very large export curbs and stockpiling. The tech behemoth has trumpeted a new wave $500 billion investment in the US to build those very same supercomputers. She says a $5.5 billion charge looms in the future. This is all thanks to the especially high inventories of the H20 chip, which would never be sold due to recently introduced export restrictions.
The H20 chip plainly wasn’t conceived with small, cutting edge, Chinese companies in mind. It offers a much more rudimentary AI semiconductor alternative—30% toned down from Nvidia’s top-tier H100 chip. Regulatory issues mean Nvidia is having a hard time getting all the H100 chip into China. As of the AI Diffusion Rule, the U.S. government has prohibited its export to China. As the ramifications of these controls become clearer, Nvidia’s share price has taken a beating, crashing through key support levels and sparking panic selling by investors.
Export Regulations and Their Impact
Just a week ago, the Trump administration declared that Nvidia’s H20 chips now require an export license. This requirement will be permanent unless explicitly removed. This move comes out of Department of Defense anxiety that these chips could be used in Chinese supercomputers. Such abuse would create grave national security hazards.
Nvidia confirmed this situation, stating, “The [US government] indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China. On April 14, 2025, [they] informed the Company that the license requirement will be in effect for the indefinite future.” The Biden administration’s hard-line approach has left Nvidia with no choice but to adjust its approach to doing business with Chinese companies.
Analysts expect the Trump administration to soon move to restrict exports of the H20 chip to any Chinese buyer. This is notable given that businesses can still apply for licenses to sell certain products to specific Chinese entities. This uncertainty hangs over the day-to-day operations of Nvidia and, moreover, its long-term market position.
Financial Strain from High Inventories
The fiscal consequences of these export restrictions are now taking center stage. Nvidia previously stated an intention to incur a $5.5 billion charge. This decision is a result of its extremely high stockpiles of the H20 chip, which now appear destined to rot due to mosaic regulations coming into effect.
This caught the attention of major Chinese firms such as ByteDance and Tencent who were tremendously interested in the H20 chip. They wanted to get a hold of the technology before the expected export ban was expedited. Now, with a climate of uncertainty and regulatory hurdles, demand for the H20 chip has dropped off precipitously.
As Nvidia ponders its high inventory levels, the fall in its stock price has been dramatic. On April 7, the stock even dipped below $87 for a short period. They then crashed back down toward $100, an almost $6 drop from their former support floor of over $105. The company’s stock plummeted up to 10% on Wednesday alone, wiping out $300 million in market capitalization, as investors increasingly voted on the company’s prospects with their feet.
Stock Performance and Market Reactions
As they’ve proven time and time again, market reactions to Nvidia’s recent challenges have been fast and phenomenal. Analysts point to a meaningful rotation under the hood in Nvidia’s stock. The 50-day Simple Moving Average (SMA) has crossed below the 200-day SMA, indicating the company may be entering a long term down cycle. This technical analysis corroborates more general market concerns which have contributed to a sharp sell-off of Nvidia shares.
Investors are looking to see how all of these moves will impact Nvidia’s future growth potential. The company has ambitious plans to build $500 billion worth of supercomputers. Its ambitious new federal infrastructure law may soon be eclipsed by its massive fiscal woes and regulatory hurdles.
The export ban on the H100 chip and the indefinite license requirement for the H20 chip create further complications for Nvidia’s strategy in China—a critical market for semiconductor companies. As competitors look to fill any voids left by Nvidia’s regulatory challenges, the tech giant must navigate these turbulent waters with caution.