The tariffs announced by President Donald Trump on April 2 have hit the tech sector hard, especially Nvidia. Nvidia, which lost billions of dollars in market value in a matter of days, has seen its stock price fall by $270 billion. As the US-China trade war intensifies, Nvidia said in a filing with the US Securities and Exchange Commission that the US government's requirement to obtain a license to export its H20 chips to China will cost the company an additional $5.5 billion.
The H20 GPU is designed to run AI models, but it is built to comply with US regulations, compared to Nvidia's top-of-the-line A100 chip. To continue operating in the huge Chinese market, Nvidia CEO Jensen Huang told CCTV that the restrictions have hit the company hard, but it will continue to serve the Chinese market. “China has been a key driver of our growth. We will continue to optimize our products and comply with the regulations,” Huang said.
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To mitigate the impact of the tariffs, Nvidia announced a $500 billion investment to increase manufacturing in the U.S. The company, which has acquired a million-square-foot manufacturing facility in Phoenix, will work with Taiwan Semiconductor Manufacturing Company (TSMC) to develop Blackwell chips. These chips will be used for the RTX 50-series GPUs. In addition, it is building two supercomputer plants in Texas.
“American manufacturing will strengthen our supply chain and help meet the increased demand for AI chips and supercomputers,” Huang said in a press release. The move is aimed at increasing Nvidia’s resilience and reducing the impact of the tariffs. However, while Nvidia’s losses are relatively small compared to Apple, which lost $700 billion, the trade war and restrictions continue to challenge the company’s operations in the Chinese market.
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Despite trade policy uncertainties, NVIDIA’s strategic shift to US-based manufacturing demonstrates a strong commitment to meeting global demand for AI infrastructure. However, the company faces a complex challenge of complying with US regulations while maintaining its relationship with China. In the coming months, industry observers will be closely watching how Nvidia’s strategies will pan out.