Trump’s chip export ban targets China’s AI rise, hits Nvidia and AMD with billions in losses

Trump administration has blocked US AI chip exports to China

The Trump administration has imposed sweeping new restrictions on the export of artificial intelligence chips to China, abruptly halting sales of Nvidia’s H20 and AMD’s MI308 processors and signalling a hardline approach to China’s AI ambitions. The move, which caused shares of Nvidia and AMD to drop about 7% each, aims to prevent Chinese companies from using American tools to fuel rapid advancements in AI.

Nvidia takes $5.5 billion hit amid shifting rules
Despite Nvidia’s recent plans to invest in US supercomputing infrastructure and follow export guidelines, the company was blindsided by the sudden rule change. US officials told Nvidia this week that its AI products would now fall under stricter export controls. Nvidia expects a $5.5 billion charge this quarter, largely tied to unsellable inventory. AMD also anticipates up to $800 million in losses.

Crackdown tied to rise of China’s DeepSeek
The ban was partly prompted by the emergence of Chinese startup DeepSeek, which developed powerful AI models with lower computing needs—models US officials say benefited from Nvidia’s chips. Commerce Secretary Howard Lutnick, in a January confirmation hearing, criticized Nvidia’s role in enabling Chinese breakthroughs and vowed to end it: “Stop using our tools to compete with us,” he said.

China placed massive last-minute orders
Ahead of the crackdown, Chinese tech giants including Alibaba, Tencent, and ByteDance rushed to place $18 billion in H20 chip orders in just three months—more than Nvidia’s total China revenue from last year. That surge highlighted China's dependence on US processors for its AI acceleration needs and added urgency to US restrictions.

Trump administration signals long-term AI decoupling
The chip ban is part of a broader strategy to prevent China from accessing critical technologies amid rising geopolitical and economic tensions. Trump’s recent 145% tariff on some Chinese goods—followed by partial reversals—has created market volatility and sent mixed signals. But the latest export controls confirm a more consistent aim: block China from developing AI with US resources.

Chinese firms pivot to local chipmakers
With H20 chips now off the table, Chinese cloud companies are expected to turn to domestic alternatives from firms like Huawei and Cambricon. Citigroup analysts said that while 50% of China’s 2025 AI accelerator demand was expected to be met by H20 chips, buyers will now pivot to homegrown suppliers, accelerating Beijing’s push for tech self-sufficiency.

Political pressure mounts to tighten controls
A congressional committee report released Wednesday urged further restrictions on AI chip exports and called for increased funding for the Commerce Department’s Bureau of Industry and Security. The Trump administration is also reviewing global chip sales for national security concerns, with a decision due in May that could further reshape the semiconductor industry.