The new restrictions from the Department of Commerce directly affect NVIDIA’s revenue and clear the way for Huawei to strengthen its position in the Chinese artificial intelligence market.
Santa Clara, USA | The U.S. administration has tightened restrictions on the export of high-performance chips to China, forcing NVIDIA to halt sales of its GPU H20 HGX, specifically designed for the Chinese market. This decision will have an immediate financial impact on the company, which estimates losses of up to $5.5 billion related to inventory, purchase commitments, and reserves associated with the product.
The news has been confirmed by NVIDIA through a statement submitted to the U.S. Securities and Exchange Commission (SEC), detailing that the U.S. government requires a specific license to export H20 chips to China, Hong Kong, Macao, and other D:5 countries. This license will be in effect “for an indefinite period,” marking the immediate end of planned operations in these markets for the H20 line.
What is the H20 chip and why is it so important?
The H20 HGX is a limited version of the H100 chip, modified by NVIDIA to comply with U.S. export regulations in effect since 2022. This model was designed to maintain the company’s presence in China, offering restricted performance in artificial intelligence, with a reduced memory bandwidth and computational capacity compared to the original H100.
However, the new measures from the Department of Commerce have further lowered the allowed technical threshold for export, placing the H20 above the limit. Therefore, NVIDIA can no longer sell this chip or other similar variants that meet or exceed its technical capability.
A hard hit amidst AI expansion
The setback comes at a particularly sensitive time for the company. With a stock valuation that could drop more than 7% at the start of the trading day following the news, NVIDIA faces an abrupt correction in its revenue expectations for the first fiscal quarter of 2026, which ends on April 27.
Meanwhile, competitors like AMD are also affected by the restrictions, though their presence in the Chinese AI market is much smaller. According to industry sources, the bulk of the market still revolves around NVIDIA, with companies only turning to AMD or Intel as secondary alternatives.
Huawei strengthens as a local player
This decision, however, could translate into an opportunity for Huawei, the leading local player in China. With the latest generation of U.S. GPUs out of the picture, Huawei has a clear path to increase its market share at home, boosting its systems like the AI CloudMatrix 384, based on Ascend 910C chips, which are already being deployed on a large scale.
An adapted new version?
NVIDIA is expected to rapidly work on a new variant of the H20 or another alternative chip adapted to the new regulatory requirements. This would not be the first time the company develops specific models for China in response to regulatory changes. Nevertheless, the increasing political and technological pressure on hardware supply to Beijing makes this strategy more complicated than ever.
Conclusion
The U.S. technological policy continues to shape the direction of the global semiconductor industry. NVIDIA, the undisputed leader in AI hardware, now faces an unexpected slowdown in one of the world’s most strategic markets. Meanwhile, China is accelerating its efforts to reduce its technological dependence and consolidate its sovereignty in artificial intelligence. The coming weeks will be key to seeing how the Californian giant responds to this new twist in the tech war.
Source: Sec.Gov