Nvidia revealed plans to write-off as much as $5.5 billion in fiscal Q1 2026 (ending 27 April) following the US requiring an export licence for its H20 chips shipped to China.

In a stock market filing on 14 April, the chipmaker noted the government indicated the licence requirement addresses the risk the chips may be used or diverted to a supercomputer in China and will be in effect for the indefinite future.

The write-down will cover charges associated with H20 products for inventory, purchase commitments and related reserves, Nvidia added.

Founder of industry blog Radio Free Mobile Richard Windsor noted Nvidia is unlikely to be able to sell the lower-capacity H20 chip in other markets due to a limit on its performance estimated at 14 per cent of the compute throughput of its high-end H100.

Windsor expressed doubts the latest move would prevent China from producing large language models (LLMs) because silicon does not really determine the ability to make them, but more the speed and economics of their production and use.

Nvidia reconfigured the H100 for China following US export controls introduced in October 2023 to slow the country’s ability to produce cutting-edge AI. The H20 is its top-end chip available in the country.

The company saw a surge in demand for its H20 chips in late January as Tencent, Alibaba and ByteDance increased orders as they shifted their AI development set-ups to copy DeepSeek’s low-cost LLM.

Nvidia’s chip was not covered by US export licensing rules at the time.

The new US licensing requirement also applies to US-based AMD’s AI chip exports to China.