Nvidia flags $4.5bn export charge

Nvidia said a new U.S. export-license rule for China forced it to take a $4.5 billion charge, even as quarterly revenue climbed to $44.1 billion. (sec.gov) The company reported first-quarter fiscal 2026 results on May 28, 2025, with data-center revenue of $39.1 billion, up 73% from a year earlier. Nvidia said the charge was tied to H20 chips, a China-focused product line hit by the licensing change announced on April 9, 2025. (sec.gov) Nvidia said it sold $4.6 billion of H20 products before the new rule took effect and could not ship another $2.5 billion of H20 revenue in the quarter. Gross margin fell to 60.5% on a generally accepted accounting principles basis; excluding the charge, non-generally accepted accounting principles gross margin would have been 71.3%. (sec.gov) The H20 is a lower-spec artificial-intelligence chip Nvidia designed for China after earlier U.S. restrictions tightened access to its most advanced processors. On April 9, 2025, Nvidia disclosed that Washington would now require a license for H20 exports to China, Hong Kong, Macau, and some related destinations. (sec.gov) That put a direct cost on one of the few legal channels Nvidia still had into China’s AI server market. Nvidia said the $4.5 billion hit came from excess H20 inventory and purchase obligations after demand for the chip dropped under the new licensing regime. (sec.gov) The U.S. government has been tightening advanced-chip controls on China since 2023, saying the rules are meant to restrict technology with military and advanced-computing uses. The Bureau of Industry and Security said in a December 2023 update that the measures were designed to curb China’s ability to produce advanced semiconductors for weapons and artificial intelligence. (bis.gov) Nvidia has also warned investors that Chinese policy is pushing buyers toward domestic alternatives. In its fiscal 2026 annual report, the company said Chinese authorities had encouraged customers to buy from China-based competitors and discouraged use of Nvidia data-center products, including China-specific versions built to meet U.S. rules. (sec.gov) Even with that setback, Nvidia’s results showed demand from cloud companies and other AI customers remained strong. Chief executive Jensen Huang said in the earnings release that “global demand for NVIDIA’s AI infrastructure is incredibly strong,” as the company kept expanding data-center sales outside the restricted China channel. (nvidianews.nvidia.com) The episode left Nvidia with two numbers moving in opposite directions: record-scale AI revenue and a multibillion-dollar policy bill attached to selling chips into China. (sec.gov)