Nvidia has responded to the growing scrutiny over its H20 chip exports to China, asserting that it fully complies with U.S. government regulations on where its products can be sold. The company’s statement came after it revealed $5.5 billion in costs related to canceled H20 chip orders, which require a license for export to China, a restriction imposed by the U.S. government this week.
In a statement addressing an investigation by the House Select Committee, Nvidia emphasized that it follows the government’s directives on exports without deviation. This investigation focuses on potential national security threats posed by Chinese access to Nvidia’s advanced chips. The H20 chip, a slowed-down version of Nvidia’s AI processors, was introduced after the Biden administration’s 2022 restrictions on AI chip exports. Nvidia maintained that its sales policies align with these restrictions.
The company’s brief response indicates its defense strategy as the political and regulatory landscape around its business grows increasingly complex. Nvidia’s stock price dropped nearly 7% on Wednesday, reflecting investor concerns amid the ongoing investigation. As a dominant player in the AI chip market, Nvidia’s products are crucial to AI applications, including systems used by China’s DeepSeek to build R1, which caused a stir in global markets earlier this year.
Nvidia also highlighted its contributions to the U.S. economy, including the taxes it pays, its U.S.-based workforce, and its role in technology leadership. The company noted that its export activities help address the U.S. trade deficit, directly responding to concerns raised by President Trump’s tariff policies.
However, the U.S. government has raised questions about Nvidia’s past sales of H20 chips, calling the transaction a “loophole” under the previous rules. Nvidia’s statement also clarified that shipments to Singapore, its second-largest market, are not destined for China but are often routed to the U.S. or Taiwan, addressing concerns about potential circumvention of export controls.
Nvidia faces additional restrictions starting next month under new “AI diffusion rules” proposed by the Biden administration. These rules will further limit the company’s ability to export AI chips to certain international markets, increasing the pressure on Nvidia as it navigates the evolving regulatory environment.
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