Major chip company Nvidia is dealing with new and unexpected US rules about selling its H20 chips to other countries.

On Tuesday, Nvidia said the U.S. government told them they need permission to sell their H20 AI chips to China. Nvidia also said this permission will always be needed because the U.S. government is worried the chips could be used in powerful computers in China.

Nvidia expects to have costs of $5.5 billion for this in the first quarter of its financial year 2026, which finishes on April 27. The company's stock price fell by about 6% after the market closed.

The H20 is the best AI chip Nvidia is allowed to sell to China based on the current and past rules from the U.S.

Maybe it's not a surprise, but on Monday, Nvidia announced they will spend a lot of money, hundreds of millions of dollars, in the next four years to make some AI chips in the U.S. However, people who know a lot about this quickly said that the company didn't give many details.

Several government officials wanted stricter rules for sending the H20 chip to other countries. They said a Chinese AI company used it to train their AI models, like the R1 model. This R1 model surprised the U.S. AI market in January.

Nvidia opted not to provide a statement.