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

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.