Trump Trade: Nvidia sees Q1 charges of $5.5B due to H20 restrictions

TipRanks

Thu, Apr 17, 2025, 8:10 AM 5 min read

RESTRICTIONS: In a regulatory filing, Nvidia (NVDA) stated, “On April 9, 2025, the U.S. government, or USG, informed NVIDIA Corporation, or the company, that the USG requires a license for export to China (including Hong Kong and Macau) and D:5 countries, or to companies headquartered or with an ultimate parent therein, of the Company’s H20 integrated circuits and any other circuits achieving the H20’s memory bandwidth, interconnect bandwidth, or combination thereof. The USG indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China. On April 14, 2025, the USG informed the company that the license requirement will be in effect for the indefinite future. The company’s first quarter of fiscal year 2026 ends on April 27, 2025. First quarter results are expected to include up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves.”

Wells Fargo notes that following Nvidia’s 8K announcement last night, AMD (AMD) has filed an 8K this morning announcing that it too expects new U.S. Government license controls on GPU sales into China to impact the company’s MI308X. AMD says that while it expects to apply for licenses, there are no assurances that licenses will be granted. Therefore, the company is announcing that it expects to take up to an $800M inventory, purchase commitment, and related reserve charge, likely in Q2, says Wells. The firm has an Overweight rating on AMD with a price target of $140.

PARTS FROM CHINA: Tesla’s (TSLA) plans to ship parts from China for the Cybercab and Semi electric trucks in the U.S. were suspended after President Donald Trump raised tariffs on Chinese goods, Reuters reports, citing a person with direct knowledge. The move may disrupt the company’s plans to begin mass production of the models. Tesla was prepared to absorb the costs when Trump imposed the 34% tariff on Chinese goods but could not do so when the tariffs were increased, leaving shipping plans suspended, the person told Reuters.

DELISTING: Officials in President Donald Trump’s administration and the president’s supporters are “leaning further into the prospect of delisting the nearly 300 Chinese companies that trade on U.S. exchanges,” according to a recap from Politico. On April 10, Fox Business Network’s Charles Gasparino previously reported, citing sources, that the Trump administration was proceeding toward a possible delisting of Chinese public company shares on U.S. exchanges. Chinese companies that publicly trade in the U.S. include Alibaba (BABA), Yum China (YUMC), Tencent (TCEHY), NetEase (NTES), PDD (PDD), Nio (NIO), Baidu (BIDU), and JD.com (JD).

EARTH MINERALS EXPORTS: China has suspended exports of a wide range of critical minerals and magnets as part of China’s retaliation for President Trump’s sharp increase in tariffs that started on April 2, the New York Times’ Keith Bradsher reported. On April 4, the Chinese government ordered restrictions on the export of six heavy rare earth metals, which are refined entirely in China, as well as rare earth magnets, 90% of which are produced in China, the report noted. Publicly traded companies in the space include MP (MP).

FARMERS: In a post to Truth Social, President Donald Trump stated, “Our farmers are GREAT, but because of their GREATNESS, they are always put on the Front Line with our adversaries, such as China, whenever there is a Trade negotiation or, in this case, a Trade War. The same thing happened in my First Term. China was brutal to our Farmers, I these Patriots to just hold on, and a great trade deal was made. I rewarded our farmers with a payment of $28 Billion Dollars, all through the China deal. It was a great transaction for the USA, until Crooked Joe Biden came in and didn’t enforce it. China largely reneged on the deal (although they behaved during the Trump Administration), only buying a portion of what they agreed to buy. They had ZERO respect for the Crooked Biden Administration, and who can blame them for that? Interestingly, they just reneged on the big Boeing deal, saying that they will ‘not take possession’ of fully committed to aircraft. The USA will PROTECT OUR FARMERS!!!” Publicly traded companies in agriculture space include Andersons (ANDE), Archer Daniels (ADM), Bunge (BG), CF Industries (CF), Compass Minerals (CMP), Intrepid Potash (IPI) and Mosaic (MOS).

LITTLE PROGRESS WITH EU: Officials from the European Union and U.S. made little progress bridging trade differences this week and officials from President Donald Trump’s administration indicated that the bulk of the U.S. tariffs imposed on the bloc will not be removed, sources told Bloomberg’s Alberto Nardelli and Jorge Valero. EU trade chief Maros Sefcovic left the meeting with little clarity on the U.S. stance and is struggling to determine the American side’s aims after having met for about two hours with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, people familiar with the discussions are reported to have said.

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