Nvidia Chip Deal Helps China’s AI Goals: Dave Lee

US-China Trade & Technology Dynamics - The US government's decision to allow NVIDIA and AMD to sell AI semiconductors into China involves a potential 50% revenue cut, benefiting NVIDIA and China, but potentially hindering US technological advantage [2] - China is urging its domestic firms not to use NVIDIA's H20 chips, aiming to protect its domestic semiconductor industry [1][5] - China's domestic AI chip capabilities are estimated to be a couple of years behind NVIDIA's H20 chip in terms of inference capabilities and running AI applications [3] - The US-China trade deal is becoming increasingly complex, with rare earth metals and other chips potentially used as leverage [9] NVIDIA's Position - NVIDIA needs to balance pleasing both the US and China, which is proving difficult [11] - China is a very important part of NVIDIA's business, representing billions of dollars in revenue, with potentially billions more at stake [10] - Restrictions on the H20 chip could lead to NVIDIA writing off billions of dollars [11] Strategic Implications - The US's decision to allow AI chip sales to China doesn't seem to warrant the dramatic change in national security policy, given existing concerns over exporting these chips [7][8] - China may restrict the sale of NVIDIA's chips to gain leverage in trade negotiations with the US [10] - The US may not be a winner in the deal, despite Trump's deal-making reputation [6][7]