Nvidia Stock Drops 3.24% as China Export Ban Hits

On May 19, 2025, Nvidia's stock dropped by 3.24% in pre-market trading.

Nvidia's decision to halt the export of its Hopper architecture to China marks a significant shift in its strategy amidst escalating U.S. export controls on semiconductors. The company's CEO, Jensen Huang, confirmed that Nvidia will no longer produce Hopper series chips for the Chinese market. This move comes after the U.S. government added the H20 chip, based on the Hopper architecture, to an indefinite export control list, requiring it to use GDDR memory instead of high-bandwidth memory (HBM). This change has forced Nvidia to write off $55 billion in inventory and has led to a 6.9% drop in its stock price.

Nvidia is now focusing on developing two alternative products: a downgraded version of the H20 chip using GDDR7 memory and a custom chip based on the Blackwell architecture, both of which are expected to be released later this year. However, these products face significant challenges, including potential performance limitations and the risk of further U.S. government restrictions. Additionally, Chinese AI companies are increasingly turning to domestic chips, such as Huawei's Ascend 910B, which has shown superior performance and lower costs compared to Nvidia's offerings.

This shift in strategy by Nvidia is part of a broader trend in the global semiconductor industry, where geopolitical pressures are leading to a fragmentation of supply chains. While Nvidia plans to establish a research and development center in Shanghai, its core design and production will remain overseas, potentially exacerbating the divide between global semiconductor supply chains. This move by Nvidia could lead to a further loss of market share in China in the short term but may also drive the company to accelerate technological innovation and explore new business models, such as cloud services and subscription-based offerings.