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Nvidia (NVDA) said it lost $2.5 billion in revenue from China during its fiscal first quarter and projected an additional $8 billion loss in the second quarter.
Nvidia also said it took a $4.5 billion charge due to a write-down in inventory (chips it produced but now can't sell) in the first quarter due to the new export rules. However, that was less than the $5.5 billion hit expected.
Nvidia's fiscal first quarter ended on April 27, shortly after the Trump administration enacted a ban on sales of Nvidia's H20 chips to China. China is one of Nvidia's biggest markets, and investors were closely watching the company's commentary about how the ban would impact future sales.
Nvidia's first quarter revenue from China of $5.5 billion was below the $6.2 billion expected by Wall Street analysts tracked by Bloomberg. The China market also accounted for a smaller share of Nvidia's revenue than the prior two quarters — 12.5% in the first quarter, compared with roughly 14% and 15% in the prior two periods, respectively.
"[T]he $50 billion China market is effectively closed to US industry," CEO Jensen Huang told analysts in a call following its earnings report.
"The H20 export ban ended our Hopper data center business in China," he said, later adding, "The new set of limits are pretty much make it impossible for us to reduce Hopper any further for any productive use."
Nvidia has made specialized chips called H20 — based on the company's prior-generation Hopper AI graphics processing units (GPUs) — for export to China to comply with US export controls.
Huang said the company will "see if we can come up with interesting products that could continue to serve the Chinese market" but said "we don't have anything at the moment."
Nvidia has repeatedly updated its chips for the Chinese market in the past several years to comply with ever-tightening trade restrictions, making the chips less and less powerful with each new iteration. Over that time frame, China has also declined as a share of Nvidia's total revenue.
"China's AI moves on with or without US chips. ... The question is not whether China will have it. It already does," Huang said. "The question is whether one of the world's largest AI markets will run on American platforms."
"Shielding Chinese chipmakers from US competition only strengthens them abroad and weakens America's position. Export restrictions have spurred China's innovation and scale," he added.
