Nvidia H20 China Pushback

US-China Tech & Trade Dynamics - US and China are handling specific sectors and industries differently, particularly semiconductors [1] - The US President is reportedly willing to make ad hoc exceptions across the technology sector and in raw materials [2] - A potential "quid pro quo" involves the US seeking a revenue share from US chipmakers' China earnings in exchange for allowing them to do business there [3] - China desires access to certain American technologies and raw materials, potentially as bargaining chips [4] China's Semiconductor Strategy - China is reportedly advising firms against buying H series chips, indicating potential preference for domestic alternatives [5] - These advisories, issued in July, are non-binding guidance, which is normal for China regarding foreign technology with security concerns [6] - China's preference for national chips, like Huawei's accelerator, is driven by domestic pride and technological advancements beyond Nvidia's H-20 [7] - China aims for its technology companies to use national chips instead of the H-20 [8] Nvidia's Position and Market Impact - Nvidia's H-20, an AI accelerator based on the Hopper architecture, was specifically engineered for the Chinese market to comply with US export restrictions [9] - Nvidia had approximately $5 billion worth of H-20 inventory that it couldn't sell [10] - China is a crucial market for AI, and Nvidia wants to be its technology provider of choice [11] - If the US doesn't allow Nvidia to serve China, China may rely heavily on a domestic champion, resulting in lost revenue opportunity for Nvidia and America [12] - The potential loss of Nvidia's revenue from China is causing recalculations, with estimates suggesting a potential $7-8 billion in the next fiscal quarter [8]