The Trump administration on Monday told US chipmaker Nvidia that it would export its powerful H20 chips to China and several other countries, telling it that new licensing requirements must be met.
Nvidia said it could meet the restrictions.
Nvidia was notification The new licensing requirement, which remains indefinitely, “addresses risks that may be used or used on Chinese supercomputers.”
The H20 chips are not the most powerful product in Nvidia’s stock, but up until now it has been the most powerful chip that Nvidia can legally sell to China.
Nvidia CEO Jensen Huang will give a keynote speech at the Conusher Electronics Show (CES) in Las Vegas, Nevada on January 6, 2025.
The Biden administration restricted sales of more advanced chips to China in 2022. Nvidia has circumvented the limit by reducing the capabilities of its popular H100 chips until it lowers export restrictions and creates products sold exclusively in China.
China used H20 Create Deepseek offers high levels of performance in just a small portion of the price with a new AI that rattles global markets when introduced late last year. According to its creator, one of the reasons Deepseek was developed so cheaply is because its physical construction adopted these inexpensive Nvidia chips.
Deepseek’s sensational debut will bring to Chinese tech companies order Over $16 billion H20 chips. In response, Nvidia will step up production and fear that there will be a backlog of stocks that cannot be sold as there is no demand for H20 outside of China. The unique nature of the H20 can alleviate that problem somewhat. This is because some of the frozen export stocks could be H100 chips that have not yet been “throttled” up to the lower H20 specification.
The bigger, long-term problem is that losing access to the H20 could prompt China to develop comparable chips within the country, possibly through electronics Titan Huawei, and Nvidia could lose its favorable Chinese market forever. Nvidia recorded $17 billion in sales to China last year.
Watch – President Trump: Joe Biden has made China “get us away” with trade:
“It makes little sense to us to ban the H20. The H20 is low and far below the already available Chinese alternatives. Essentially, it’s just passing on the Chinese AI market to Huawei,” analyst Stacy Rasgon I said Wednesday Investor.
Left wing New York Times Wednesday (NYT) It’s attracting attention The politics of the Nvidia situation is complicated as Massachusetts’ leading senator Elizabeth Warren strongly supports restricting H20 sales to China.
Warren wrote to Secretary of Commerce Howard Lutnick, urging restrictions on H20 sales without “additional delays” as even the throttle chips sold to China were strong enough to put US national security at risk, and found it difficult for American companies to source all the artificial intelligence chips they needed.
Nvidia’s position on the issue also seems sensitive, as CEO Jensen Huang invested considerable effort in blocking the company’s chip export restrictions. A day before the new restrictions were announced, the White House praised Nvidia for pledging $500 billion to manufacture AI equipment in the US.
That’s what Nvidia’s stock was like. under 7% on Wednesday after news of export restrictions were destroyed. The NVIDIA H20 was not the only export of electronic equipment to China, which was restricted on Monday. Another company, Advanced Micro Devices, also slipped 7% on Wednesday due to export restrictions, but chipmakers like Qualcomm lost 2-3% of their value.
