Semiconductor giant Nvidia is facing unexpected new US export controls on its H20 AI chips, according to a filing on Tuesday. The company has been informed by the US government that it will need a license to export its H20 AI chips to China, citing concerns that the chip may be used in a supercomputer in China.

The license requirement will be in place indefinitely, and Nvidia anticipates $5.5 billion in related charges in its Q1 2026 fiscal year, which ends April 27. The news sent Nvidia's stock tumbling, with a 6% decline in extended trading.

The H20 is the most advanced AI chip that Nvidia can export to China under the current and previous export rules. Last week, it was reported that CEO Jensen Huang may have negotiated his way out of new H20 restrictions during a dinner at President Donald Trump's Mar-a-Lago resort, committing to invest in AI data centers in the US. However, the new export controls suggest that the agreement may not have been as ironclad as initially thought.

On Monday, Nvidia announced plans to spend hundreds of millions of dollars over the next four years manufacturing some AI chips in the US. While the move was seen as a positive step, pundits were quick to point out that the company's commitment was light on details. The timing of the announcement has raised eyebrows, with some speculating that it may have been an attempt to appease the US government and avoid the new export controls.

The US government's concerns over the H20 chip are centered around its potential use in Chinese supercomputers. Multiple government officials had been calling for stronger export controls on the H20, citing its alleged use in training models from China-based AI startup DeepSeek, including the R1 "reasoning" model that caused a stir in the US AI market in January.

The new export controls are likely to have significant implications for Nvidia's business, particularly in the Chinese market. The company has been a dominant player in the AI chip market, and the H20 is one of its most advanced offerings. The requirement for a license to export the chip to China will likely add complexity and uncertainty to Nvidia's supply chain, and may impact its revenue in the region.

The move also highlights the ongoing tensions between the US and China over technology and trade. The US government has been increasingly wary of China's growing technological prowess, and has taken steps to limit the export of sensitive technologies to the country. The new export controls on the H20 chip are likely to be seen as part of this broader effort to protect US technological advantages.

Nvidia declined to comment on the new export controls, but the company's stock price and anticipated charges suggest that the news will have a significant impact on its business. As the AI chip market continues to evolve, it remains to be seen how the new export controls will shape the competitive landscape and influence the development of AI technologies.