Trade tensions between the United States and China have reached a new level in the technology sector, and Nvidia is one of the hardest hit. The company has revealed that the Trump administration’s recent restrictions on the export of artificial intelligence (AI) chips are severely impacting its business, particularly its H20 chip , designed for high-performance data centers.
A balance sheet of multi-million-dollar losses
During the first quarter of its fiscal year 2026, which ended April 28, Nvidia reported a $4.5 billion loss directly related to licensing requirements for exporting the H20 chip to China. This is compounded by a loss of $2.5 billion in unrealized sales , also attributed to these restrictions.
The company had anticipated a loss of approximately $5.5 billion , but the situation turned out to be even more adverse. For the second quarter, Nvidia projects an additional loss of $8 billion , compared to a period in which it expected to generate nearly $45 billion in revenue. This represents a considerable setback for a company that has been a leader in developing key AI technologies.
China: a market no longer within reach
Nvidia CEO Jensen Huang has been clear in his message: the Chinese market is, in practice, closed to the company. According to Huang, China represents one of the most active environments for AI development worldwide, with half of the researchers in the field based there. For Nvidia, this means losing not only a $50 billion market but also a strategic platform from which to project global leadership.
“The platform that wins in China is well positioned to lead globally today,” Huang said during the financial results call. However, he emphasized that current limitations prevent Nvidia from further adjusting the design of its Hopper chip—the foundation of the H20—to meet the new requirements. In other words, there is no viable technical leeway to adapt to the rules without sacrificing product functionality.
Consequences beyond business
The dispute goes beyond simple accounting figures. For Huang, the Trump administration’s policies, which seek to curb China’s technological advancement, could end up having the opposite effect: strengthening Chinese manufacturers by eliminating direct competition from American companies like Nvidia.
This view aligns with his criticism of other recent government measures. While Huang welcomed the scrapping of the Biden administration’s “Artificial Intelligence Diffusion Rule”—a regulation that would have further restricted the export of AI technologies—his statements make clear that the regulatory environment remains volatile and hostile to semiconductor manufacturers.
Does Nvidia have a plan B for China?
In the short term, the company has no clear solution to the problem. Huang admitted that Nvidia is exploring ways to remain competitive in the Chinese market, but for now they must bear the financial and operational impact of the restrictions. This means that a large part of its data center portfolio has been sidelined in one of the regions with the highest demand for advanced AI capabilities.
From a strategic perspective, this could push Nvidia to further diversify its markets and accelerate its presence in regions like India, Southeast Asia, and Latin America , where trade tensions with the United States are not a limiting factor. It could also encourage internal restructuring aimed at developing products with versions specifically tailored to regions with different export regulations.
An uncertain outlook for the entire industry
Nvidia’s case is not isolated. Other companies in the semiconductor sector could also be affected if the restrictions continue or expand. And while the US government’s intention is to maintain global technological leadership, these types of policies can create incentives for China to accelerate its technological autonomy , something it has been pushing for several years.
As if it were a drag race, political decisions and technical capabilities are intertwined in a scenario where every move has global consequences. For Nvidia, this means rethinking its role on the global stage of artificial intelligence and realizing that leadership is not built solely on innovation but also on diplomacy and adaptability.
FAQ from Content
Q1: What financial losses did Nvidia report due to export restrictions on its H20 chip to China?
A1: Nvidia reported a $4.5 billion loss in Q1 FY2026 due to licensing restrictions and an additional $2.5 billion in unrealized sales, all tied to the H20 chip export limits.
Q2: Why is the Chinese market now considered unreachable for Nvidia?
A2: Nvidia CEO Jensen Huang stated that current export regulations prevent further adjustments to the H20 chip design, effectively closing off the $50 billion Chinese market.
Q3: What strategic consequences does Nvidia face beyond financial losses?
A3: Beyond revenue loss, Nvidia risks losing global AI leadership and fears the restrictions may strengthen Chinese chipmakers by removing American competition.
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