What chip export controls mean for Nvidia, ASML and TSMC

Chip export headlines get read as if Nvidia, ASML and TSMC were one trade with one China percentage. I don't read them that way. A license rule can make a designer scrap inventory. An equipment maker can keep shipping, since a lot of the tools were never the controlled ones. At a foundry the rule can live in the risk factors while the income statement barely moves. I care which of those three the filing describes. The share price will often trade the headline as if all three had happened.

A tariff makes a legal shipment more expensive. An export control decides whether the shipment is legal. I put that distinction, and the way a keyword screen mashes the words together, in sanctions and export controls are not tariffs. This piece stays with the rules as written, and with what these three companies have actually reported.

The rules, roughly in the order they landed

The Bureau of Industry and Security, inside the Commerce Department, writes the controls into the Export Administration Regulations. The practical question for a company is whether a given chip, computer, or manufacturing tool needs a license for a named destination, end user, or end use, and whether that license is likely to be granted. No license, no shipment. A later license can bring a slice of the business back. Inventory bought for the order that will not ship can be written down in between. I keep that sequence around because the same rule can show up as a charge, then a reversal, then a small licensed sale, inside a year or two.

The modern stack starts with the rule BIS issued on October 7, 2022, published in the Federal Register on October 13, 2022 (87 FR 62186). It put controls on advanced computing integrated circuits, on computers that contain them, and on certain semiconductor manufacturing items. It also expanded license requirements for foreign-produced items headed to specified Chinese entities already on the Entity List, and it required a license for defined activities of US persons who support the development or production of certain chips in China. A foreign direct product rule is the piece that surprises people. A chip or a tool made outside the United States can still be subject to US license rules if it is the direct product of specified US technology or software. Where the factory sits doesn't finish the question.

BIS updated the controls on October 17, 2023. The texts were published on October 25, 2023: one interim final rule on semiconductor manufacturing equipment (88 FR 73424) and one on advanced computing items (88 FR 73458). The computing rule kept the China license requirement, changed the parameters that decide whether a chip is controlled, and widened the geography to make circumvention harder. Nvidia's own description of the parameters, in its filings, is the one I can follow. Total processing performance, performance density, interconnect bandwidth, and memory bandwidth. A chip that was designed to sit just under an old line can sit over the new one. People had been calling the thing "China compliant." The product sat there unchanged, and it could no longer be sold.

A further interim final rule was effective December 2, 2024 and published on December 5, 2024 (89 FR 96790). It added controls on more manufacturing equipment, new foreign direct product rules aimed at advanced-node production, and controls on certain high bandwidth memory. High bandwidth memory matters because the accelerator and the memory next to it carry different export classifications. The argument I kept seeing was about the GPU die. The package around that die can still get caught.

License practice can also change by a notice to one company. Nvidia's H20 got one of those notices in April 2025, before a new part number showed up in the company's telling. Wait for a tidy rule name and you will be late. The document I open is the 8-K.

Nvidia took a charge, sold a little, then met Beijing

Nvidia's Form 8-K on the April 9, 2025 notice says the US government told the company that day that a license was required to export the H20, and any other circuit reaching the H20's memory bandwidth, interconnect bandwidth, or the combination, to China including Hong Kong and Macau, to other Country Group D:5 destinations, and to companies headquartered there or with an ultimate parent there. The government said the concern was use in, or diversion to, a supercomputer in China. On April 14, 2025 it said the requirement would last indefinitely. The 8-K said results for the first quarter of fiscal 2026, ending April 27, 2025, were expected to include up to approximately $5.5 billion of charges for H20 inventory, purchase commitments, and related reserves.

The Form 10-K for the year ended January 25, 2026 reports the charge that was actually taken: $4.5 billion in that first quarter, for excess H20 inventory and purchase obligations, because demand for the H20 diminished. I use $4.5 billion when I am talking about the accounts. I keep the $5.5 billion only as the ceiling the company published in the week of the notice. The gap between them is why I won't trade the first press line as if it were the audited number. Gross margin for the full year was 71.1 percent, down from 75.0 percent the year before. The filing attributes that decline to the shift from Hopper HGX systems to Blackwell racks and to the H20 charge. It stops short of handing the whole 3.9 point drop to the charge, and I leave the split where the filing left it.

Licenses showed up later. They did not put the business back. The FY2026 10-K says that in August 2025 the government granted licenses to ship certain H20 products to certain customers in China, and that Nvidia generated approximately $60 million of H20 revenue under those licenses. Officials expressed an expectation that the government would receive 15 percent or more of the revenue from licensed sales. The filing says no regulation codified that expectation. I would not book it as a tax that was collected. It is a sentence about what officials said, next to a $60 million sales figure, and that figure is tiny against $215.938 billion of fiscal 2026 revenue.

The geography table in that 10-K is by customer headquarters, and the filing warns that the end customer and the shipping location can be somewhere else. China including Hong Kong was $19.677 billion, down from $25.048 billion the year before. The United States was $149.617 billion. Data Center revenue was $193.737 billion. The sentence I actually use is narrower than the China line. As of the end of fiscal 2026, Nvidia said it was effectively foreclosed from competing in China's data center compute market, because it could not field a competitive product that both Washington and Beijing would accept. China revenue fell by $5,371 million. Total revenue rose from $130.497 billion to $215.938 billion. A falling China line inside a much larger company is one observation. "China revenue disappeared" is somebody else's sentence, and this table doesn't support it.

The quarterly report for the quarter ended July 26, 2026 moves the story past the 10-K. I would miss it if I stopped at the annual, and I almost did. It says the August 2025 H20 licenses would have allowed certain shipments, but the Chinese government restricted those sales and Nvidia was unable to sell its H20 inventory. On the H200, licenses beginning in February 2026 allowed small amounts to specific customers, and the Chinese government restricted those sales too. In the first half of fiscal 2027 Nvidia took a further $0.4 billion charge for H200 excess inventory and purchase obligations. After that charge it shipped a fraction of what the US licenses allowed. Those shipments were less than 1 percent of Data Center revenue in the quarter. The licenses still require inspection in the United States before the chips leave, so any H200 shipped under the program pays a 25 percent tariff on the way into the United States. The filing says Nvidia has been unable to pass any of that tariff on to customers, and does not expect to.

I went back through that paragraph because I had skimmed it. The US license was granted. The chips still mostly stayed put. Beijing also had to let them in, and in this telling it did not, except for a fraction, and the fraction came after the inventory had already been written down. The same 10-Q says that as of the end of that quarter Nvidia could still ship uncontrolled products to China, naming gaming and workstation GPUs, and was still effectively foreclosed from the data center compute market. The earnings release filed the same day, August 26, 2026, says the outlook for the following quarter assumes no Data Center compute revenue from China. Headquarters revenue from China including Hong Kong was $7.880 billion of $96.221 billion in the quarter, and $12.430 billion of $177.837 billion in the first half, against $13.644 billion in the first half a year earlier. China dollars in the half were down. The company totals printed next to them were not down with those China dollars.

Reading the documents and ignoring the headline, I think Nvidia's export problem stopped being a single US performance threshold sometime in 2025. The product has to clear two governments. A tariff attaches because the license forces the chip through US inspection. The revenue table still shows billions from China-headquartered customers, since gaming and other uncontrolled parts did not get the same treatment as data center compute. If you hold Nvidia, I would rather argue about that split than about a single China percentage.

ASML, where the share fell and the euros stayed

ASML's Form 20-F for the year ended December 31, 2025 says customers in China represented 29.1 percent of 2025 total net sales and 36.1 percent of 2024 net sales. The geographic note attributes sales to the place where the customer's facilities are, rather than the parent's headquarters. Nvidia's map is the other one. So is TSMC's. A tool installed in a Chinese fab counts as China even if the customer group is filed somewhere else.

The same note gives the euros. I need the euros, because the percentage on its own misled me the first time. China net sales were €7,251.8 million in 2023, €10,195.1 million in 2024, and €9,519.7 million in 2025. Total net sales in 2025 were €32,667.3 million. The China share dropped from 36.1 percent to 29.1 percent because China euros fell and because the rest of the company grew. A sentence that only says "China exposure declined" leaves out the €9,519.7 million that was still booked. Four customers each accounted for more than 10 percent of 2025 net sales, together €20.0 billion, or 61.2 percent. Licenses are granted customer by customer. That concentration is part of the exposure. I keep it in the same paragraph, not in a footnote I will skip.

The 20-F is plain about which machines need permission. Under Dutch, US and other law, ASML has to obtain export licenses for EUV systems, for specific DUV immersion systems, and for some other products. Deliveries to countries such as China have been increasingly subject to those licenses. The company also lists what changed in 2025. Several of the changes are smaller than a headline makes them sound, which I only noticed once I had the dates in a row. Effective January 15, 2025, the Netherlands added an export license for an additional group of tools, mainly certain metrology and inspection systems. In November 2025 the European Union folded certain Dutch controls into the EU list, including advanced DUV immersion systems exported outside the EU. ASML says that did not change its own position, because those products already needed a Dutch license. On October 1, 2025 the US Commerce Department's Affiliates Rule would have extended Entity List restrictions to entities that are at least 50 percent owned by listed parties. ASML says implementation was suspended for one year, until November 10, 2026, as part of a trade agreement with China, and that the rule currently has no impact on its operations.

Read 29.1 percent as "export controls missed ASML" and you've skipped the license list. The company still has to license EUV and specific immersion tools, and it booked €9,519.7 million in China anyway. Per the 20-F, non-EUV sales in 2025 were at a similar level to 2024 and were primarily driven by the China mainstream business, while the EUV business grew on advanced logic and DRAM. A headline that says "chip equipment controls," and never names the tool, hasn't reached ASML's revenue yet. I have mixed up an EUV tool and a dry DUV stepper when the headline was that vague. They are different line items.

TSMC's percentage fell while the China dollars sat still

TSMC's Form 20-F for the year ended December 31, 2025 classifies net revenue by the country where the customer is headquartered, and it says that can differ from the country the wafer is shipped to or ordered from. In 2025, North America was NT$2,875,270 million, or 75 percent. China was NT$327,503 million, or 9 percent. A year earlier China was NT$331,673 million, or 11 percent. In 2023 it was NT$267,154 million, or 12 percent. Total 2025 net revenue was NT$3,809,054 million. China dollars were roughly flat from 2024 to 2025, off by NT$4,170 million. The share fell from 11 percent to 9 percent because the company grew elsewhere. The filing says 2025 net revenue rose by NT$914,746 million, of which North American orders contributed NT$843,944 million, a 42 percent increase. Plot only the China percentage and you will think TSMC lost a China business. The table says the China business held still while North American customers expanded.

On the rules, the 20-F points at the October 2022 and October 2023 US controls on advanced computing integrated circuits, and at further US rules in January 2025 under which TSMC may need a license before shipping products made on 16 nanometer or tighter processes to specified destinations. It also describes the foundry side of the same October rules: a license for items subject to the US regulations if they are destined to a Chinese fab making specified advanced-node chips, and for US persons who support that activity. TSMC had a Validated End-User authorization so its Nanjing fab could receive eligible US exports without a separate license each time. That authorization expired in December 2025. The Commerce Department then granted TSMC Nanjing an annual export license. The filing says the annual license keeps the fab supplied and the deliveries going, and that there is no assurance it will be renewed or left in place.

Then the sentence that sits oddly next to Nvidia's accounts. As of the date of the annual report, TSMC says its results of operations have not been materially affected by the expanded export controls or by the countermeasures adopted in response. I believe the company. The sentence is also easy to stretch. "Not materially affected so far" still leaves a renewal on the calendar. The Nanjing license is an annual piece of paper. The 16 nanometer threshold is a shipment rule that can touch a customer the revenue table calls North America, if that customer's chips are the ones that need the license. Headquarters geography will miss it. The same trap, for a portfolio that looks American because the companies are filed in the United States, is the subject of your US portfolio might not be a US portfolio.

Three China figures, counted three different ways

I would get a bad note if I dropped 9 percent, 29.1 percent and $19.677 billion into one column and called the column China exposure. The 9 percent is headquarters revenue at a foundry whose growth came from North American customers. Tools going into fabs located in China are the 29.1 percent. The $19.677 billion is a designer's invoices, and the data center product for that market has been written down twice. Average the three and the portfolio note comes out wrong in both directions. I have started that column and had to delete it.

What I check before I lump them together

• Separate the license from the tariff. On Nvidia's H200 they arrived together, because the US license requires inspection in the United States and the 10-Q says that triggers a 25 percent import tariff the company has not passed on.
• Read the China line with its definition in the same paragraph. Nvidia and TSMC use customer headquarters. ASML uses the customer's facility. 29.1 percent and 9 percent come out of those two definitions, so treating them as one answer muddles the note.
• Ask whether dollars fell or only the share fell. TSMC's China net revenue went from NT$331,673 million in 2024 to NT$327,503 million in 2025. The percentage dropped because North America grew. Nvidia's China headquarters revenue fell by $5,371 million in fiscal 2026, and the data center compute franchise was the part the company called foreclosed.
• For equipment, name the tool. ASML's license list is EUV, specific DUV immersion, and some other products. The 20-F still shows a large China mainstream business beside that list.
• For a foundry, the operational item is the Nanjing annual license and any rule on 16 nanometer and tighter shipments. TSMC says results have not been materially affected. The renewal is still annual.
• If the holding is AMD or Broadcom, leave Nvidia's charge where it is. AMD's filing is about a named accelerator and a license. Broadcom's China figure is a delivery location, and a large share of that company is software. I check the accounts. The sector label has sent me to the wrong filing before.

Educational reading of export controls and company disclosures. Not investment advice. Rule dates are from BIS publications in the Federal Register: 87 FR 62186 (October 13, 2022), 88 FR 73424 and 88 FR 73458 (October 25, 2023), and 89 FR 96790 (December 5, 2024). Nvidia figures are from its April 9, 2025 Form 8-K, its Form 10-K for the year ended January 25, 2026, its Form 10-Q for the quarter ended July 26, 2026, and the earnings release filed August 26, 2026. ASML figures are from its Form 20-F for the year ended December 31, 2025. TSMC figures are from its Form 20-F for the year ended December 31, 2025. Licenses and revenue mixes change.