Nvidia writes off $5.5 billion in GPUs as US gov't chokes off supply of H20s to China
AMD's Instinct MI308 reportedly gets export restrictions too.
Nvidia will take a $5.5 billion financial hit after U.S. authorities imposed new export restrictions on its H20 HGX AI GPU designed for the Chinese market, the company said Tuesday.
The U.S. government cited H20's memory and interconnect bandwidth as well as its potential use in supercomputers as reasons for the new restrictions. Nvidia is not alone: the U.S. Department of Commerce has also restricted sales of AMD's Instinct MI308 to China, according to Reuters.
"On April 9, 2025, the U.S. government informed Nvidia that the USG requires a license for export to China (including Hong Kong and Macau) and D:5 countries […] of the company's H20 [GPUs] and any other circuits achieving the H20's memory bandwidth, interconnect bandwidth, or combination thereof," a statement by Nvidia reads.
"The USG 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, the USG informed the company that the license requirement will be in effect for the indefinite future."
President Trump's administration planned to restrict sales of Nvidia's H20 HGX and similar processors starting in April, so Nvidia's chief executive, Jensen Huang, reportedly even attended a $1 million-a-head dinner with the U.S. president to ease concerns. That did not work, and the company will now take a $5.5 billion charge in the first quarter as it now has unsold inventory of its H20 GPUs.
According to section 8.01 of the report. "The company's first quarter of fiscal year 2026 ends on April 27, 2025. First quarter results are expected to include up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves."
Nvidia's H20 HGX is a cut-down version of its H100 processor that the company specifically engineered to comply with the U.S. government's restrictions imposed on GPUs bound for China in late 2022. Compared to H100, the H20 features significantly reduced AI performance and dramatically reduced HPC performance, which makes it barely suitable for supercomputer workloads that require FP64 compute precision.
Get Tom's Hardware's best news and in-depth reviews, straight to your inbox.
The H20 HGX still carries 96GB of HBM3 memory with a peak bandwidth of 4 TB/s and 900 GB/s NVLink interconnections to build 8-way AI servers, thus providing competitive performance in AI workloads.
As a result, H20 HGX has become rather popular in China. Chinese companies like Alibaba, ByteDance, and Tencent have deployed large AI training and inference clusters based on these GPUs. Earlier this month, it was reported that Chinese tech giants spent $16 billion on H20 HGX GPUs in the first quarter ahead of expected export restrictions by the U.S. government starting in May.
In addition to restricting sales of Nvidia's H20 GPUs to Chinese customers, the U.S. Commerce Department also restricted shipments of AMD's Instinct MI308 to China and other D:5 countries. Since AMD is considerably behind Nvidia in sales of AI GPUs, this will barely have a drastic effect on the company's business, though.
Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
-
A Stoner Seems overblown, unless $5.5 billion is the loss they have for selling these to someone else who would want them. The way processors are as limited as they are, I am quite certain that these can find homes in the friendly western world.Reply -
SparklyIO Reply
Its a loss in accounting terms. The loss is due to the fact that the H20 GPUs are no longer saleable at their original price, and this is their reduced value. It is a non-cash expense that reduces profitability for the quarter. Still an asset in inventory for sale, though.A Stoner said:Seems overblown, unless $5.5 billion is the loss they have for selling these to someone else who would want them. The way processors are as limited as they are, I am quite certain that these can find homes in the friendly western world.
And you're right, I'm sure they'll find an AI/crytpo farm somewhere to roam free and burn carbon. -
2Be_or_Not2Be Also, China can (and does) buy supply from other countries, even with the full datacenter products. It's not like Nvidia is putting in controls in the rack system to shut down if it is running in a specific country.Reply -
bit_user Reply
If the AI Diffusion program is being implemented, then it will be a non-trivial challenge for China to get very many of them.2Be_or_Not2Be said:Also, China can (and does) buy supply from other countries, even with the full datacenter products. It's not like Nvidia is putting in controls in the rack system to shut down if it is running in a specific country.
https://www.tomshardware.com/tech-industry/artificial-intelligence/us-ai-diffusion-policy-may-harm-nvidias-sales-most-of-the-chipmakers-ai-gpus-are-affected -
nogaard777 The best part is seeing another report on this stating Nvidia was already hard at work to design a new SKU just below the government's new limits, when the H40 was already exactly that. Nvidia badly wants that China money and they'll work overtime to give China the fastest possibly GPUs they can legally.Reply
As well as illegally seeing as how we've already seen reports that after the previous restrictions went into place Singapore's orders magically inflated by 7000% as Nvidia sent them off and looked the other way. Nothing is going to change until the US government goes after and fines NVIDIA to stop it instead of just placing regulation that Nvidia sidesteps.
Neither Nvidia or AMD have any qualms about selling out their country to make a buck. -
bit_user Reply
As I linked above, the AI Diffusion program was designed to mitigate that sort of thing. We'll see how well it works, if it ever goes into effect.nogaard777 said:As well as illegally seeing as how we've already seen reports that after the previous restrictions went into place Singapore's orders magically inflated by 7000% as Nvidia sent them off and looked the other way. Nothing is going to change until the US government goes after and fines NVIDIA to stop it instead of just placing regulation that Nvidia sidesteps. -
2Be_or_Not2Be Reply
Interesting - of course, with all of the security measures/safeguards & people (like investigators) being cut (and cut out) by DOGE in the US, it's almost a guarantee that pretty much won't be implemented or enforced.bit_user said:If the AI Diffusion program is being implemented, then it will be a non-trivial challenge for China to get very many of them.
https://www.tomshardware.com/tech-industry/artificial-intelligence/us-ai-diffusion-policy-may-harm-nvidias-sales-most-of-the-chipmakers-ai-gpus-are-affected
Even that article says: "In Tier 2 countries, entities can import up to 1,700 Nvidia H100 GPUs (or equivalent) without a license, and these do not count toward national AI chip limits." Just like Amazon amassed tons of generic 6-character "sellers", seems like the same would happen in those "Tier 2" countries for "buyers" of the bigger DGX/HGX/etc. systems - they'll just resell it to the restricted entities. -
bit_user Reply
We don't know how tight the export restrictions in those countries are. The tier-2 designation might depend on their ability to do some of the work to prevent flow-through to tier-3. Their incentive would be staying off the tier-3 list, themselves.2Be_or_Not2Be said:Even that article says: "In Tier 2 countries, entities can import up to 1,700 Nvidia H100 GPUs (or equivalent) without a license, and these do not count toward national AI chip limits." Just like Amazon just amassed tons of generic 6-character "sellers", seems like the same would happen in those "Tier 2" countries for "buyers" of the bigger DGX/HGX/etc. systems - just reselling it to other restricted entities.
Also, if lots of mysterious buyers in a tier-2 country appeared out of nowhere, maybe it would attract a response of some kind, like lowering that limit.
You're probably right that this won't come into effect. One reason I think so is because access to AI GPUs might be seen as a negotiating chip.