Nvidia Revenue Loss: H20 Chip Licensing Impact

Nvidia's Q1 2026 Earnings and Chip Export Restrictions

Nvidia has released its financial results for the first quarter of fiscal year 2026, concluding on April 28th. These reports detail the impact of recent chip-export restrictions imposed by the Trump administration on the company’s operations.

Financial Impact of Export Controls

A $4.5 billion charge was incurred by Nvidia during Q1. This is directly attributable to licensing stipulations that limited the sale of its H20 AI chip to entities within China.

Furthermore, the restrictions prevented the shipment of an additional $2.5 billion in H20 revenue during the same quarter.

Initial Estimates and Subsequent Revisions

When the U.S. licensing requirements were initially announced in April, Nvidia projected related charges of approximately $5.5 billion for Q1.

Projected Losses for Q2

Nvidia anticipates an $8 billion reduction in revenue for Q2. Total revenue for Q2 is currently estimated to be around $45 billion, representing a substantial financial impact.

CEO Commentary on the Chinese Market

During the Q1 earnings call, CEO Jensen Huang addressed the situation. The company is actively exploring strategies to maintain competitiveness within China’s AI market.

However, a write-off for the H20 chips is currently unavoidable. Huang stated, “China is one of the world’s largest AI markets and a springboard to global success with half of the world’s AI researchers based there.”

The Significance of the Chinese AI Market

Huang emphasized the importance of the Chinese market, stating that dominance there often translates to global leadership in AI. He noted that the $50 billion Chinese market is now largely inaccessible to Nvidia.

The H20 export ban effectively halted the company’s Hopper data center business in China. Further reduction of the Hopper architecture to achieve compliance is not feasible.

Nvidia's Position on Export Restrictions

Nvidia has publicly voiced opposition to the Trump administration’s efforts to curtail the export of U.S.-manufactured AI chips to countries like China.

Huang commended the recent decision to abandon Joe Biden’s Artificial Intelligence Diffusion Rule, which would have introduced even stricter chip-export controls.

Continued Impact Despite Rule Reversal

Despite the non-implementation of Biden’s proposed rules, Nvidia is demonstrably affected by the Trump administration’s attempts to hinder the growth of China’s AI sector.

Huang's Perspective on Competition

Huang argued that the central question isn't whether China will develop AI capabilities, as they already exist. Instead, the focus should be on whether American platforms will be utilized within one of the world’s largest AI markets.

He believes that protecting Chinese chip manufacturers from U.S. competition will ultimately strengthen them internationally and diminish America’s standing.

This report has been updated to incorporate statements from Nvidia’s earnings call.