Nvidia kept some China customers in the dark about new US chip clampdown, sources say
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The move to restrict H20 shipments marks Washington’s latest effort to limit China’s access to advanced semiconductors.
PHOTO: REUTERS
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SINGAPORE - Nvidia did not warn at least some major customers in advance about new US export rules it was told about a week ago, requiring it to obtain licences to sell its China-focused artificial intelligence (AI) chip, according to two sources familiar with the matter.
The US chipmaker disclosed on April 15 that American officials had informed the company on April 9 that its H20 chip would require an export licence for sales to China
The move to restrict H20 shipments marks Washington’s latest effort to limit China’s access to advanced semiconductors, as the US seeks to maintain its edge in AI technology.
Major Chinese cloud companies were still anticipating H20 deliveries by the year end, unaware of the impending restrictions, according to the two sources, who said Nvidia’s China sales team also did not appear to be informed ahead of the public announcement. They spoke on condition of anonymity because of the sensitivity of the matter.
Nvidia said in a statement on April 16 that it adheres by US export laws on where it can sell its processors. “The US government instructs American businesses on what they can sell and where – we follow the government’s directions to the letter,” it said.
The export controls threaten Nvidia’s business in China, one of its largest markets. Nvidia had secured US$18 billion (S$23.6 billion) of H20 orders since the start of 2025
China generated US$17 billion in revenue, or 13 per cent of Nvidia’s total sales, in its last fiscal year that ended on Jan 26.
Nvidia shares fell 6 per cent in after-hours trading on April 16 after it said it would take up to US$5.5 billion of charges in the first quarter ending April 27 due to the licensing requirement, which the US government told it on April 14 would be indefinite.
The charges are associated with inventory, purchase commitments, and related reserves for H20 products, the company said.
Chinese tech giants including Tencent, Alibaba and ByteDance, the owner of TikTok, had increased orders for H20 chips amid surging demand for affordable AI models from companies like start-up DeepSeek, Reuters reported in February.
Alibaba, ByteDance and Tencent did not immediately respond to requests for comment.
Shares in Alibaba fell 4.1 per cent and Tencent dropped 1.8 per cent in Hong Kong trading on April 16.
The H20 is the primary chip Nvidia is legally permitted to sell in China, and was launched after the latest round of US export restrictions took effect in October 2023.
Washington has banned exports of Nvidia’s most advanced chips to China since 2022, concerned that advanced technologies could be used by Beijing to build up its military capabilities.
The restrictions on H20 could benefit Chinese AI chipmakers, particularly Huawei, which offers competing products to Nvidia’s line-up, analysts said.
“By restricting the H20 system, US regulators are effectively pushing Nvidia’s Chinese customers towards Huawei’s AI chips,” said Mr Nori Chiou, investment director at Singapore-based White Oak Capital Partners.
“Huawei’s chip design and software capabilities are likely to advance quickly as it gains more customers and development experience,” he added. REUTERS
