Nvidia (NVDA) mentioned it expects to take a $5.5 billion cost in its fiscal 2026 first-quarter outcomes after the U.S. restricted exports of its artificial intelligence (AI) chips to China.

The information, the latest salvo in an escalating commerce warfare between Washington and Beijing, despatched the agency’s shares tumbling roughly 6% in premarket buying and selling Wednesday.

The corporate mentioned in a regulatory submitting late Tuesday that it was knowledgeable by the U.S. authorities on April 9 that it could be required to have an export license «for the indefinite future» to promote its H20 chips to China. Nvidia mentioned the license requirement is aimed toward addressing the chance that the chip could be «utilized in, or diverted to, a supercomputer in China.» The chip is much less highly effective than its newer ones and tailored to fulfill current export limits for the Chinese language market.

Nvidia’s Q1 outcomes, that are anticipated Might 28, are set to incorporate the $5.5 billion cost «related to H20 merchandise for stock, buy commitments, and associated reserves,» it mentioned. In line with Morningstar Analysis, «China has shrunk to about 10% of Nvidia’s income from 20%, and we now count on it to go to shut to zero.»

The New York Occasions reported {that a} spokesman for the U.S. Commerce Division mentioned «that the administration was issuing new export licensing necessities for the Nvidia H20; a chip from Superior Micro Gadgets, the MI308; and their equivalents.» AMD (AMD) shares additionally had been down about 6% in premarket buying and selling.