Nvidia’s (NVDA) recent struggles with U.S. export restrictions have left some of its major Chinese customers in the dark. According to Reuters, the company failed to inform clients like Alibaba (BABA), Tencent (TCEHY), and ByteDance about new U.S. regulations requiring licenses to sell its H20 AI chips to China. These firms were expecting to receive the chips, designed specifically for the Chinese market, by the end of this year.
On April 9, the U.S. government informed Nvidia that it now requires an export license to ship its H20 chips to China. However, there is no clear timeline for when, or if, these licenses will be approved. This decision is part of Washington’s broader effort to limit China’s access to advanced AI technology.
Financial Hit Looms
The impact could be huge. Nvidia generated $17 billion in revenue from China last year, which is 13% of its total sales. The company had already secured $18 billion worth of H20 chip orders for 2025. Now, it warns that it will take a $5.5 billion charge due to new export curbs on its H20 chips to China and other countries. As a result, NVDA stock fell 6.3% in after-hours trading yesterday.
Adding to the trouble, Nvidia’s failure to alert clients about the restrictions could raise regulatory flags. It risks pushback from both Chinese customers and U.S. authorities over transparency and compliance.
China’s Push for Self-Sufficiency
These restrictions could speed up China’s push for chip self-sufficiency and reduce reliance on foreign technology. Analysts believe that Chinese chipmakers like Huawei may benefit as Chinese companies may seek domestic alternatives to Nvidia’s products.
While Chinese chips may lag behind Nvidia’s in performance, the shift could spark fresh investment and faster innovation in China’s AI sector.
Is Nvidia a Strong Buy Now?
On TipRanks, NVDA stock has a Strong Buy consensus rating based on 37 Buys and four Hold ratings. The average Nvidia price target of $173.11 implies nearly 54.3% upside potential from current levels.
