The tech giant Nvidia is preparing to announce devastating financial losses as Wednesday’s earnings report looms. The company has disclosed that ongoing U.S. restrictions on artificial intelligence chip exports to China will cost them an eye-watering $5.5 billion in charges, marking one of the most significant geopolitical impacts on a single tech company in recent years.
The restrictions have zeroed in on Nvidia’s H20 processor, which represented the company’s sole remaining foothold in the lucrative Chinese AI market. This specialized chip was specifically engineered to comply with earlier export controls, yet even this carefully designed product has fallen victim to the escalating trade tensions between Washington and Beijing.
Despite expectations of a robust 66.2% revenue increase to $43.28 billion in the first quarter, the shadow of lost Chinese business continues to darken Nvidia’s prospects. CEO Jensen Huang has openly admitted to abandoning $15 billion worth of Chinese contracts, a staggering figure considering China’s AI market potential of $50 billion annually. Industry analysts warn that quarterly revenues could shrink by $3-4 billion, while profit margins face a potential 12.5% decline.