As Nvidia announced its earnings for the first quarter of fiscal year 2026, ending April 28, the company revealed the impact of the Trump administration’s recent chip-export restrictions on its operations.

Figure 1. Nvidia Faces Multi-Billion Dollar Revenue Hit from H20 Chip Licensing Restrictions.

Nvidia reported a $4.5 billion charge in Q1 tied to licensing rules that limit its ability to sell the H20 AI chip to Chinese firms. Additionally, the company was unable to deliver $2.5 billion worth of H20 chip sales during the quarter due to these constraints. When the licensing requirements were first introduced in April, Nvidia had anticipated $5.5 billion in related charges for the quarter. Figure 1 shows Nvidia Faces Multi-Billion Dollar Revenue Hit from H20 Chip Licensing Restrictions.

On Wednesday, Nvidia also projected that these H20 licensing rules would cause an $8 billion reduction in revenue for Q2, with expected revenue around $45 billion, marking a significant setback.

During the Q1 earnings call, CEO Jensen Huang stated that while Nvidia is actively seeking ways to remain competitive in China’s AI market, it must, for now, write off its H20 chip inventory. Huang emphasized, “China represents one of the largest AI markets globally and serves as a critical launchpad for global success, with half of the world’s AI researchers based there. The platform that succeeds in China will lead worldwide. However, the $50 billion China market is essentially closed to us. The H20 export ban has ended our Hopper data center business in China, and we cannot further scale down Hopper to meet compliance.”

Nvidia has openly criticized the Trump administration’s efforts to restrict the export of U.S.-made AI chips to countries like China. Huang also welcomed the recent decision to cancel Joe Biden’s Artificial Intelligence Diffusion Rule, which would have introduced additional export controls.

Although Biden’s chip-export regulations never took effect, Nvidia remains significantly impacted by the Trump administration’s efforts to limit China’s AI market.

“The question isn’t if China will develop AI — it already has,” Huang said. “The real issue is whether one of the world’s largest AI markets will operate on American technology. Protecting Chinese chip makers from U.S. competition only empowers them internationally while undermining America’s leadership.”

What Are the H20 Chip Licensing Mandates?

The U.S. government has imposed licensing requirements restricting Nvidia from selling its advanced H20 AI chips to companies in China. These mandates are part of broader export controls aimed at limiting China’s access to cutting-edge semiconductor technology.

How Do These Mandates Affect Nvidia’s Sales?

Because of these restrictions, Nvidia cannot legally sell or ship the H20 chip to many potential customers in China. This limits Nvidia’s ability to tap into one of the world’s largest AI markets, directly impacting their revenue streams from these sales.

Immediate Financial Impact on Nvidia

In the first quarter of its fiscal 2026, Nvidia recorded a $4.5 billion charge due to the licensing rules. Additionally, the company missed out on $2.5 billion in potential revenue from H20 chips that could not be shipped, leading to significant financial setbacks.

Future Revenue Outlook

Looking ahead, Nvidia projects the H20 chip export restrictions will cause an $8 billion reduction in revenue in the next quarter (Q2), bringing their total expected revenue to around $45 billion. This ongoing impact underscores the severity of the restrictions.

Nvidia’s Response and Market Implications

CEO Jensen Huang highlighted the challenge of competing in China’s AI market amid these restrictions. Although Nvidia is exploring ways to maintain its presence, the export ban has essentially closed a $50 billion market to the company. Huang also criticized the export controls, warning that shielding Chinese competitors could ultimately weaken America’s position in AI technology globally.

Source: TC

Cite this article:

Priyadharshini S (2025), Nvidia Anticipates Billions in Revenue Loss Due to H20 Chip Licensing Mandates, AnaTechMaz, pp. 258