Nvidia illustrates the difficulty operating as US government rules, tariffs and other policies change almost daily.
In an SEC filing, Nvidia said it will take a first quarter charge of $5.5 billion due to new export rules on its H20 chips to China. Nvidia sold its H20 chips into China because its more powerful GPUs and accelerators were banned.
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According to Nvidia, the US government informed the company April 9 that its H20 chips would require a license to be sold in China for the "indefinite future." As result, Nvidia will take a first quarter charge of about $5.5 billion associated with "H20 products for inventory, purchase commitments, and related reserves."
That news came two days after Nvidia said its Blackwell chip production will start in Arizona at TSMC's chip plant. Nvidia said it is also building supercomputing manufacturing plans with Foxconn in Houston and with Wistron in Dallas.
Nvidia said the plan is to ramp production at both Texas plants in the next 12 to 15 months.
The GPU giant's whiplash is a microcosm of what other enterprises are facing. Tariffs are on, off, and on again with exceptions sometimes within the same day.
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Despite the charge, Nvidia demand looks strong. Enterprises have said despite uncertainty they are proceeding with AI projects. Citigroup CEO Jane Fraser summed up the consensus among CEOs. She said Citigroup is protecting necessary investments in our businesses as well as our transformation." "We shall not allow the uncertainty to distract us from executing our strategy and improving our returns," she said.
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Constellation Research analyst Holger Mueller said:
"These export restrictions are actually good news for enterprises located in North America, Europe and other geographies, as it may make more Nvidia chips available. The question is always - will Nvidia become a victim of the Osbourne effect, but with on premises demand being alive and well, there will be a number of CxOs who will be more than happy to get these H20 chips. Nvidia may well come out with a little bruise from this situation."
