Nvidia said on Tuesday that the U.S. government had blocked the sale of some of its artificial intelligence chips to China without a license and would begin requiring a license for future sales.

The restrictions are the first major limits that President Trump’s administration has put on semiconductor sales abroad. It raises the possibility that Nvidia’s sales to China will evaporate in the coming months, bringing an end to a business that has contracted as the United States has curbed chip exports to its geopolitical rival.

Nvidia has fought hard to maintain sales to China in the face of rising U.S. government restrictions. In 2022, the Biden administration imposed rules to curb the export of Nvidia’s best A.I. chips to China. Nvidia responded by modifying one of its leading A.I. chips, the H100, so that its abilities fell below U.S. government thresholds. The resulting H20 chip became a China-specific product.

Nvidia will take a $5.5 billion charge against its revenue in the current quarter because of H20 inventory, purchase commitments and related reserves, which it won’t be able to sell or fulfill in the wake of the government’s new rule, the company said.

The write-down is a bigger strategic blow than a financial one. Nvidia, which dominates the market for semiconductors used in building artificial intelligence systems, considered selling chips to China vital to its future. If it withdrew from the market, it feared that it would surrender sales to China’s leading A.I. chipmaker, Huawei, and that Huawei would begin to challenge it for sales around the world.

“This kills Nvidia’s access to a key market, and they will lose traction in the country,” said Patrick Moorhead, a tech analyst with Moor Insights & Strategy. “Chinese companies are just going to switch to Huawei.”

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