The Trump administration is considering expanding U.S. chip sanctions on China. This includes restrictions on Nvidia’s H20 chips, which were designed to comply with previous export controls. The proposed expansion has not been finalized as the new administration is still appointing key officials.

DeepSeek, a Chinese AI startup, recently introduced an AI model that competes with top U.S. models in both performance and cost. Following this announcement, Nvidia’s stock value declined significantly. The company lost $589 billion in market capitalization on Monday. Its stock price fell to $118 per share before rebounding to $127 but later dropped again by 6.9% to $122 after reports of potential new sanctions.

Despite restrictions, China remains Nvidia’s largest customer. The company is expected to generate $12 billion in AI GPU sales to China in 2024, primarily through the H20 chip. Nvidia has seen a 50% quarterly increase in H20 sales since its launch. However, even this compliant chip may face a ban as U.S. officials review China’s AI advancements.

Trump’s nominee for Commerce Secretary, Howard Lutnick, stated during his confirmation hearing that he supports strict semiconductor controls. Although he did not specify details, his stance suggests the administration may expand trade restrictions. This could further impact Nvidia’s revenue and its ability to operate in the Chinese market.

Nvidia has warned that these restrictions could harm the U.S. economy. The company argues that limiting chip exports encourages China to develop independent AI technologies, which could reduce U.S. technological leadership. Former Commerce Secretary Gina Raimondo previously stated that blocking China’s chip progress would be ineffective.

SOURCE: TOMSHARDWARE | PHOTO: NVIDIA

This article was created with AI assistance.