Nvidia faces a $5.5 billion hit after the US government tightened export controls on its AI chips to China. The restrictions, impacting the H20 chip designed for the Chinese market, require special licenses for sales. This move is the latest in a series of US actions using trade barriers to pressure China. Nvidia's shares dropped significantly following the announcement, reflecting broader concerns about escalating US-China tensions and the impact on the AI industry. The US aims to prevent China from using advanced chips for military applications, while China accuses the US of hindering its economic growth.

Prepared by Christopher Adams and reviewed by editorial team.