Nvidia recently reported earnings for the first quarter of its fiscal year 2026, which ended on April 28. The company revealed the impact of the Trump administration's recent chip-export restrictions on its business. Nvidia incurred a $4.5 billion charge in Q1 due to licensing requirements affecting its ability to sell its H20 AI chip to Chinese companies. Additionally, the chipmaker could not ship an extra $2.5 billion of H20 revenue in the quarter because of the restrictions.
When the U.S. licensing requirement was initially announced in April, Nvidia expected $5.5 billion in related charges for Q1. The company also stated on Wednesday that the H20 licensing requirements would result in an $8 billion hit to its revenue in Q2, which is forecasted to be around $45 billion—a significant loss.
During Nvidia's Q1 earnings call, CEO Jensen Huang mentioned that the company is exploring ways to remain competitive in China's AI market. However, for now, it has to take a write-off for its H20 chips. Huang emphasized that China is one of the world's largest AI markets and a gateway to global success, with half of the world's AI researchers based there. The platform that wins China is positioned to lead globally today. However, the $50 billion China market is effectively closed to Nvidia. The H20 export ban ended the company's Hopper data center business in China, and they cannot reduce Hopper further to comply.
Nvidia has been vocal against the Trump administration's push to limit the export of U.S.-made AI chips to countries, including China. Huang praised the administration's recent decision to scrap Joe Biden's Artificial Intelligence Diffusion Rule, which would have imposed further chip-export restrictions. Despite Biden's chip-export rules not being implemented, Nvidia is clearly not immune to the Trump administration's attempt to stifle China's AI market.
Huang said, "The question is not whether China will have AI; it already does. The question is whether one of the world's largest AI markets will run on American platforms. Shielding Chinese chip makers from U.S. competition only strengthens them abroad and weakens America's position." This article has been updated to include commentary from Nvidia's earnings call.