Nvidia takes $5.5bn hit from US clampdown on chip sales to China

Good morning and welcome back to FirstFT. The Trump administration is clamping down on Nvidia’s ability to sell AI chips to China, sending its shares sliding in after-hours trading. We’ll explain the move and bring you more reaction to it. Here’s what else we covering today:

• Jamie Dimon on the risks of eroding US credibility

• China’s first-quarter growth beats expectations

• Private equity groups pause dealmaking

• Turkey’s opposition leader writes from his prison cell

• And the rise of the “it” smoothie

Silicon Valley chip giant Nvidia was forced to take a $5.5bn hit to its earnings last night after the US government introduced new controls on its ability to sell artificial intelligence chips to China. The move sent Nvidia’s shares down 7 per cent and has knocked sentiment across the tech sector. Here’s what you need to know.

What are the new restrictions? The chipmaker said its H20 chip, which is tailored to comply with Biden-era export controls that already prevent the sale of its most powerful chips in China, would now require a special licence to be sold to Chinese customers. The company did not say how many licences would be granted but said the H20 licence requirement would “be in effect for the indefinite future”. Bernstein analysts said yesterday that the H20 accounted for about $12bn of Nvidia’s $17bn in China revenues over the past year.

Why has the US unveiled these new measures? The US said the new controls were necessary to address the risk of H20 chips being used in “a supercomputer in China”, Nvidia said in its filing. The US government is worried China will be more successful building supercomputers, which can be used for everything from the development of hypersonic weapons to modelling for nuclear weapons, to help the People’s Liberation Army.

Are any other companies affected? As well as issuing new export licensing requirements for Nvidia’s H20 chip, the US commerce department issued new licences for AMD’s MI308 and equivalent chips. AMD is Nvidia’s closest direct competitor in the AI data centre chip market and its shares were down 7 per cent in after-hours trading. Broadcom, whose custom AI chips are sold to customers including China’s ByteDance, also fell in after-hours trading although it was unclear whether Broadcom’s chips would be affected by the new measures. In Europe, the shares of Dutch chipmaking equipment company ASML sank 6 per cent while in Hong Kong lead AI chip buyer Alibaba was down nearly 4 per cent and Baidu and Tencent were both down about 2 per cent. Here’s the latest on the share price moves.

Join our live Q&A today on the changing trade, economic and geopolitical relationship between the US and its allies. And here’s what else we’re keeping tabs on today:

• Monetary policy: All eyes will be on The Economic Club of Chicago later today where Federal Reserve chair Jay Powell is scheduled to share his views on the economic outlook for the US.

• Economic data: March retail sales are published in the US as well as industrial production figures. The World Trade Organization publishes its annual global trade outlook, including a 2025 growth forecast.

• Company earnings: Abbott Laboratories and Travelers are expected to report first-quarter results. In the financial sector, Citizens Financial Group and US Bancorp also publish results for the period ending March 31.

Five more top stories

1. China’s economy grew at a robust 5.4 per cent in the first quarter of this year as producers front-loaded exports to beat a blitz of tariffs from Donald Trump’s administration. The strong first-quarter growth exceeded Beijing’s full-year target for 2025 as well as the 5.1 per cent forecast by analysts in a Reuters poll.

2. Trump has signed an executive order aimed at lowering drug prices for Americans by instructing regulators to allow more states to import medicines directly from countries with lower prices. With the US paying over three times more for branded drugs than other developed countries, the move will shake up the pharmaceutical industry in its biggest, most profitable market.

3. PwC has ceased operations in more than a dozen countries that its global bosses have deemed too small, risky or unprofitable, including cutting ties with several member firms in francophone Africa. Stephen Foley has more details on the Big Four firm’s push to avoid further scandals.

4. The US is engaging in efforts to negotiate a landmark global tax deal despite Trump’s criticism of the agreement, according to the OECD’s chief. Secretary-general Mathias Cormann told the FT the talks included technical concerns on how to implement reforms aimed at closing loopholes for Big Tech and multinationals, in a sign the US could back the deal.

5. Donald Trump’s tariffs are forcing private equity groups to pause their dealmaking and focus on managing their existing portfolio companies, executives in the industry have told the Financial Times. The comments are a stark reversal of earlier expectations for a boom in activity under the new administration. Here’s what private equity executives told the FT.

Today’s big interview

Donald Trump’s trade war risks eroding the US’s credibility, Jamie Dimon has told the Financial Times. The JPMorgan Chase chief executive said that the US remained “a haven” because of its prosperity, rule of law and economic and military strength, but that America’s economic pre-eminence could come under threat from the president’s attempt to reshape global trade. Read more of Dimon’s comments here and watch the interview in full.

We’re also reading . . . 

Chart of the day

The story of the English-speaking peoples, including the US, has been one of taming arbitrary power, writes Martin Wolf. Replacing tyranny with the rule of law, the role of courts in determining that law and that of the legislature in making it serves both moral and practical goals. Only in such a state can people feel safe against despotism, he adds. The Trump trade wars are a demonstration of the dangers of unchecked power. We have also been given an object lesson in the economic costs.

Take a break from the news

Today, health is wealth. The boom in wellness — from sleep aids and snacks to fitness tourism — is worth $7tn globally, according to the Global Wellness Institute. The latest accessory being brandished by 20-somethings isn’t a designer bag — it’s a made-to-order protein smoothie in a branded cup.