In a seismic move shaking both Wall Street and Silicon Valley, the Trump administration announced Monday that Nvidia’s H20 chips—its most advanced exportable AI processors to China—are now subject to indefinite licensing restrictions. The decision puts a clamp on billions in U.S. tech exports, narrows China’s access to high-performance artificial intelligence tools, and sets the stage for a fresh round of economic chess between Washington and Beijing. Nvidia, the California-based chip titan, revealed that the new restrictions could cost the company up to $5.5 billion in lost revenue. The H20 isn’t Nvidia’s most powerful chip, but it is the most powerful chip the company was legally allowed to sell to China, thanks to prior restrictions imposed by the Biden administration in 2022. To comply with those rules, Nvidia created a scaled-down version of its flagship H100 chip—the H20—specifically for the Chinese market. It wasn’t cutting-edge by American standards, but it was more than enough for Chinese developers to build a formidable AI known as DeepSeek, an LLM (large language model) that debuted late last year and rattled tech markets worldwide. DeepSeek’s success triggered a $16 billion surge in H20 chip orders from Chinese firms. The Trump administration responded swiftly. Officials told Nvidia that the H20 posed a national security risk because it could be used—or diverted—into Chinese supercomputing or military AI projects. Hence, the requirement: no shipments without a federal license. While Nvidia still holds unsold H100 chips that haven’t yet been “throttled down” to H20 specs, there’s little demand for the H20 outside China. That means billions in unsellable inventory and the real possibility of China accelerating development of domestic chips, likely through tech giant Huawei—a move that could permanently sever Nvidia’s access to a market where it posted $17 billion in sales last year. Criticism was swift—and bipartisan. Notably, Democratic Senator Elizabeth Warren, a longtime China hawk, backed the decision. In a letter to Commerce Secretary Howard Lutnick, Warren pushed for immediate action, arguing that even the toned-down H20 could compromise U.S. national security and strain already-limited domestic AI chip supply chains. Meanwhile, Nvidia CEO Jensen Huang, who just a day earlier was praised by the White House for pledging $500 billion in U.S. AI manufacturing, found himself caught in a political vice. Huang had vigorously opposed export restrictions for months, warning they would backfire by pushing China toward self-sufficiency. Now, his company’s stock is paying the price: Nvidia shares dropped 7% on Wednesday, and the pain wasn’t isolated. AMD, another chipmaker affected by the new rules, also slid 7%. Qualcomm lost 2–3%, highlighting the broader market concern that Washington's tech war with Beijing is entering a new—and more aggressive—phase. Analysts warn that this latest restriction may yield the opposite of its intended effect. As Bernstein analyst Stacy Rasgon put it, “Banning the H20 makes little sense. The chip’s performance is already behind what’s available in China. The ban essentially hands the AI market to Huawei.” This is the high-stakes tension point: control versus innovation. Washington wants to guard U.S. technological superiority, especially in AI and national security sectors. But by shutting out China completely, it risks accelerating the rise of homegrown Chinese tech competitors, further isolating American firms from one of the largest and most lucrative markets in the world.