It's been a tough year for Nvidia Corporation (NASDAQ: NVDA) shares, with the company suffering several major setbacks in the space of a few months.
In February, Nvidia's share price fell nearly 20% when Chinese startup company DeepSeek arrived on the scene.
Earlier this month, Nvidia shares were further harmed as US President Donald Trump unveiled his reciprocal tariffs. This sent Nvidia's share price to a 6-month low of $87. While some of this decline has since been recovered, the chip maker faces a new hurdle.
This week, Nvidia shares encountered another setback. The US government notified that it will now require a special license to ship its H20 graphic processing units or related hardware to China, and the license will be required indefinitely.
Based on this development, according to its latest US Securities and Exchange Commission filing, Nvidia expects to face a potential US$5.5 billion charge in its upcoming quarterly financial results.
Nvidia's share price fell 7% on this news.
Nvidia's advanced graphics processing units (GPUs) have already been banned for export to China. The H20 GPU was specifically designed to comply with export rules introduced during the Biden Administration. Last year, the chips generated an estimated US$12 billion to US$15 billion in revenue, according to CNBC.
Advanced Micro Devices voiced similar concerns, noting in a filing that it expects a US$800 million charge related to its MI308 products.
These disclosures from Nvidia and Advanced Micro Devices appear to be the first major warning that the Trump administration's battle with China could prove a major headwind for companies in the semiconductor supply chain.
While the Trump Administration has flagged exemptions for some electronics, such as semiconductors, there have also been talks of introducing a separate tariff in the future. The future remains uncertain for US technology stocks, which is never well-received by investors.
As the world's third-largest listed company, any changes in Nvidia's share price have a material impact on the S&P 500 Index (SP: .INX) and the Nasdaq Composite Index (NASDAQ: .IXIC). Those invested in exchange-traded funds (ETFs) such as the iShares S&P 500 AUD ETF (ASX: IVV) or the Betashares Nasdaq 100 ETF (ASX: NDQ), which track these indices, are affected by these movements. Investors of the Global X Fang ETF (ASX: FANG) and the Global X Semiconductor ETF (ASX: SEMI) are also impacted, with Nvidia comprising 10.6% and 9.8% of these ETFs, respectively.
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