Group 1 - NVIDIA denies the existence of backdoors, kill switches, or monitoring software in its chips, emphasizing that these are not ways to build trustworthy systems [1] - Concerns have been raised regarding the potential for remote disabling of GPUs without user consent, leading to calls for hardware kill switches by experts and policymakers [1] - The Chinese government has requested NVIDIA to explain security risks associated with its H20 chips, following reports of serious security issues [1] Group 2 - NVIDIA's CEO Jensen Huang announced the launch of the new NVIDIA RTX PRO GPU, designed for digital twin AI applications in smart factories and logistics [2] - The U.S. government imposed a ban on NVIDIA's H20 chip sales to China, which was specifically designed to comply with U.S. export restrictions [2] - Huang highlighted the importance of the Chinese market for U.S. companies, noting its size, vibrancy, and innovation potential [2]

Group 1 - The report highlights the resumption of AI chip sales to China by Nvidia and AMD, indicating a potential growth opportunity for semiconductor and AI-related companies listed on the Beijing Stock Exchange [2][3][13] - There are 16 semiconductor-related companies on the Beijing Stock Exchange, with a total market capitalization of 64.865 billion yuan as of July 18, 2025 [3][16] - The AI-related companies total 20, with a combined market capitalization of 75.575 billion yuan as of July 18, 2025 [3][18] Group 2 - The information technology sector experienced an average increase of 0.70% in stock prices during the week of July 14 to July 18, 2025 [24][25] - The average price-to-earnings (P/E) ratio for the information technology sector is reported at 91.3X, with notable performers such as *ST Guandao and Wanyuantong showing significant price increases [24][25][55] - The report indicates that the technology new industry consists of 150 companies, with a median P/E ratio rising from 53.3X to 53.4X during the same week [37][38] Group 3 - Parallel Technology (839493.BJ) is identified as a leading provider of supercomputing cloud services, with a revenue of 614.0033 million yuan in 2024, reflecting a year-on-year growth of 48.27% [3][20] - The company reported a revenue of 198 million yuan in Q1 2025, marking a 51.68% increase year-on-year [20][22] - The report emphasizes the strategic importance of AI and semiconductor sectors in driving growth within the Beijing Stock Exchange [2][3][15]

Investment Rating - The report assigns a "Buy" rating to several companies including NVIDIA, AMD, and TSMC, indicating a positive outlook for these firms in the technology sector [33]. Core Insights - The resumption of NVIDIA's H20 GPU sales to China is expected to positively impact the APAC technology supply chain, particularly benefiting companies like Inventec and Wistron [2][4]. - AMD's MI308X license applications for export to China are moving forward, which could lead to a recovery in revenue after significant write-downs [3]. - The overall demand for NVIDIA's RTX GPU series may moderate due to the increased availability of H20 GPUs, suggesting a shift in market dynamics [4][6]. Summary by Sections NVIDIA and AMD Developments - NVIDIA is filing applications to resume sales of the H20 GPU, with government assurances for license approval, and has introduced a compliant RTX PRO GPU [2]. - AMD's license applications for MI308X are under review, with expectations of resuming shipments as approvals are granted, despite prior inventory write-downs of approximately US$800 million [3]. APAC Technology Supply Chain - Inventec is positioned to benefit significantly from the H20 server rack business, with 10% of shipments to China potentially generating over 20% of sales due to higher average selling prices (ASPs) [4]. - Other ODMs like Wistron and Hon Hai are also expected to gain from the H20 export relief, enhancing their revenue prospects [4]. Semiconductor and HBM Market - The relaxation of export controls on NVIDIA's AI GPUs is anticipated to benefit upstream suppliers like TSMC and KYEC, with projections of significant growth in CoWoS demand [8]. - Samsung is expected to be the main beneficiary in the HBM market due to the resumption of H20 sales, with forecasts indicating substantial quarter-over-quarter growth in HBM bit demand [10]. Price Dynamics and Market Trends - The report notes a potential moderation in RTX GPU sales due to cannibalization from H20, with expectations of price adjustments in the secondary market [6]. - The demand for HBM is projected to surge with the resumption of H20 shipments, despite ongoing localization efforts in China [9].

Investment Rating - The report maintains a positive bias on GDS, VNET, and SUNeVision, with GDS being the top pick in the industry [3][4]. Core Insights - The resumption of the sale of NVIDIA H20 GPUs in China is seen as a major positive for the data center industry, alleviating procurement bottlenecks for Chinese hyperscalers [2][3]. - The lack of GPUs was identified as a primary reason for the subdued domestic data center bookings in Q2 2025 and the significant decline in share prices of IDCs since March [2]. - A new tender for data centers from hyperscalers is anticipated soon due to the improved GPU availability [2]. Summary by Sections Industry Overview - The report categorizes the Greater China IT Services and Software industry as cautious, while the Greater China Telecoms industry is viewed as attractive [4]. Company Ratings - GDS Holdings Ltd (GDS.O): Overweight [76] - VNET Group Inc (VNET.O): Overweight [76] - SUNeVision Holdings Limited (1686.HK): Overweight [76] Market Dynamics - The report highlights that the resumption of GPU sales is expected to stimulate demand and potentially lead to a recovery in share prices for data center operators [2][3].

Summary of Conference Call on NVIDIA and AMD Industry Overview - The conference call primarily discusses the U.S. semiconductor industry, focusing on NVIDIA (NVDA) and Advanced Micro Devices (AMD) and their recent developments regarding sales in China. Key Points on NVIDIA (NVDA) 1. **Licensing Developments**: NVIDIA anticipates that H20 licenses will soon be granted, with the U.S. government assuring the company that licenses will be issued, allowing for potential deliveries soon [1][3]. 2. **Revenue Impact**: NVIDIA estimated a loss of approximately $8 billion in revenue for the current quarter due to the China ban. However, there is an expectation of substantial revenue recovery in the second half of the fiscal year, which could lead to an EPS increase of 40-50 cents for FY2026 if $15-$20 billion in China revenue is captured [3][4]. 3. **Competitive Position**: The ability to compete in China, even with constrained parts, is seen as beneficial for NVIDIA, as it helps maintain its ecosystem advantages and limits structural risks [4]. 4. **EPS Sensitivity**: Every $10 billion in recovered revenue from China is estimated to contribute approximately 25 cents to NVIDIA's EPS [3][9]. 5. **Price Target and Rating**: NVIDIA is rated as Outperform with a price target of $185, reflecting optimism about its datacenter opportunities [6][8]. Key Points on Advanced Micro Devices (AMD) 1. **Revenue Losses**: AMD reported a $700 million hit to Q2 revenues due to the China ban, with an additional expected loss of $800 million in the second half of the year, totaling around $1.5 billion for the year [5]. 2. **Potential Recovery**: While it is too late to book China sales for the current quarter, AMD may recover some revenue in the second half, potentially around $1 billion [5]. 3. **EPS Impact**: Similar to NVIDIA, every $1 billion in additional China revenue for AMD corresponds to approximately 25 cents in EPS. Capturing this amount could lead to mid to upper single-digit accretion to current consensus EPS for CY25 [5][10]. 4. **Price Target and Rating**: AMD is rated as Market Perform with a price target of $95, indicating concerns about high expectations in AI and weaknesses in core business segments [6][8]. Additional Insights - **Market Dynamics**: The easing of restrictions on NVIDIA is viewed positively, as the previous ban was considered unnecessary and could have handed the AI market in China to competitors like Huawei [4][11]. - **EPS Projections**: The expected EPS accretion for NVIDIA from incremental China revenue is projected at 10% for the current year, while AMD might see a 7% increase [10]. - **Strategic Relationships**: NVIDIA's CEO has been actively engaging with U.S. administration members to mitigate the risks associated with the ban, which reflects a strategic approach to maintaining market access [2]. This summary encapsulates the critical developments and financial implications for NVIDIA and AMD in the context of the U.S. semiconductor industry, particularly regarding their operations in China.

Investment Ratings - NVIDIA (NVDA): Outperform with a price target of $185 [6] - AMD: Market Perform with a price target of $95 [6] Core Insights - NVIDIA anticipates the granting of H20 licenses, which could lead to significant revenue recovery in China, potentially adding $15-$20 billion in revenue and 40-50 cents in EPS upside for FY2026 [3][4] - The easing of the China ban is expected to benefit NVIDIA's current year EPS by approximately 10% and AMD's by mid to upper single digits [10] - The datacenter opportunity for NVIDIA remains substantial, with significant upside potential, while AMD faces challenges in its core business despite high AI expectations [8] Summary by Sections NVIDIA - NVIDIA's recent announcements suggest a positive shift regarding H20 licenses, with expectations to resume sales in China [1][2] - The company faced an estimated $8 billion loss in revenue due to the previous ban, but recovery in the second half of the fiscal year is anticipated [3] - Every $10 billion in recovered revenue from China could translate to approximately 25 cents in additional EPS for NVIDIA [9] AMD - AMD has not made similar announcements regarding the easing of restrictions, but it is expected to experience similar dynamics as NVIDIA [5] - The company estimated a $700 million hit to Q2 revenues and an additional $800 million loss in the second half, totaling around $1.5 billion for the year [5] - Each $1 billion in additional revenue from China for AMD corresponds to about 25 cents in EPS, with potential recovery in the second half of the fiscal year [9] Market Context - The report highlights that allowing NVIDIA to compete in China is crucial to maintaining its ecosystem advantages and preventing the market from shifting to local competitors like Huawei [4] - The overall sentiment is that the previous ban on NVIDIA's H20 was unnecessary, as its performance was already below that of local alternatives [11]

Group 1 - The US and Indonesia have reached a significant trade agreement, with Indonesia committing to purchase $15 billion in US energy products, $4.5 billion in agricultural products, and 50 Boeing aircraft [2] - Indonesia will impose a 19% tariff on all goods exported to the US, while US exports to Indonesia will enjoy tariff-free treatment [2] Group 2 - China's GDP for the first half of 2025 was reported at 66,053.6 billion yuan, with a year-on-year growth of 5.3% [6] - The second quarter GDP growth was recorded at 5.2%, with a quarter-on-quarter increase of 1.1% [6] Group 3 - The National Bureau of Statistics is formulating measures to enhance market order and address "involution" competition in certain industries [7] - These measures aim to improve market supply-demand relationships and promote reasonable price recovery, benefiting corporate profits and economic structure adjustment [7] Group 4 - The Ministry of Industry and Information Technology is drafting mandatory national standards for mobile power supplies, including stricter technical requirements for safety [9] - The standards will cover aspects such as overcharge protection, short circuit protection, and production process requirements for lithium-ion batteries [9] Group 5 - The eleventh batch of national drug centralized procurement has been initiated, with 55 varieties selected for procurement [11] - This initiative is part of ongoing efforts to streamline drug procurement processes and improve healthcare affordability [11] Group 6 - The People's Bank of China reported an increase in M2 money supply growth to 8.3% and M1 growth to 4.6%, indicating a narrowing gap between the two metrics [31] - The data suggests a recovery in consumer and housing demand, with a notable increase in household loans [31] Group 7 - The film box office in several counties has surpassed 30 million yuan, indicating a rise in county-level consumption and entertainment infrastructure [32] - Notable counties include Kunshan, Yiwu, and Jiangyin, which ranked highest in box office earnings [32]

Core Viewpoint - NVIDIA is seeking to resume the sale of its H20 GPU in China, having received assurances from the U.S. government regarding the granting of necessary licenses, which is crucial for initiating commercial activities in the Chinese market [2][10]. Group 1: H20 GPU Development and Compliance - The H20 GPU was developed in response to U.S. export control regulations that were updated in October 2023, which set specific performance thresholds for chips sold to China [5]. - The H20's design adheres to the U.S. Bureau of Industry and Security (BIS) regulations, ensuring its total processing performance (TPP) is below the 4800 TPP limit, despite its performance being significantly lower than the banned H100 chip [6][8]. - The H20 features a floating-point performance of 148 TFLOPS, compared to the H100's 1979 TFLOPS, and has increased HBM3 memory capacity from 80GB to 96GB [6][7]. Group 2: Market Dynamics and Competition - The announcement of H20's potential return comes amid a rapidly evolving competitive landscape in China, where local AI chip manufacturers are gaining market share due to U.S. export restrictions [12][13]. - By 2025, the share of AI servers in China sourced from local suppliers is expected to rise to 40%, nearly equal to that of foreign suppliers, indicating a significant shift in the market [13]. - Local companies have made substantial investments in AI infrastructure, with a notable example being China Mobile's procurement of 7994 AI servers, predominantly from Huawei's ecosystem [14]. Group 3: Strategic Shifts and Future Outlook - NVIDIA is also introducing the NVIDIA RTX PRO GPU, aimed at industrial AI applications, which aligns with China's push for manufacturing upgrades and presents lower export control risks [10]. - The competitive landscape for NVIDIA's H20 is challenging, as local firms have established strong footholds in the AI infrastructure market, necessitating NVIDIA to justify its product's performance reductions and adapt to local market conditions [11][16]. - The decision for Chinese customers to return to NVIDIA's technology ecosystem will be complex, given their investments in local alternatives [17].

Core Insights - NVIDIA's CEO Jensen Huang visited China for the third time in 2025, coinciding with NVIDIA's market capitalization surpassing $4 trillion [2] - NVIDIA is seeking to resume sales of the H20 GPU, which was previously restricted by U.S. export controls, with assurances from the U.S. government for licensing [2][8] - The H20 chip was developed in response to U.S. export regulations, designed to comply with specific performance metrics set by the U.S. Department of Commerce [4][5] Product Development and Compliance - The H20 chip was created following the U.S. export control updates in October 2023, which imposed strict performance thresholds for chips sold to China [4] - The H20's specifications show a significant reduction in performance compared to the restricted H100, with H20 achieving 148 TFLOPS in FP16/BF16 performance, while H100 reached 1979 TFLOPS [5] - H20's memory capacity increased from 80GB in H100 to 96GB, and its memory bandwidth improved from 3.35 TB/s to 4.0 TB/s, while maintaining interconnect performance [6] Market Dynamics and Competition - The introduction of H20 and the new NVIDIA RTX PRO GPU aims to tap into the industrial AI applications market, aligning with China's manufacturing upgrade policies [8] - The Chinese AI chip market is rapidly evolving, with local suppliers expected to capture 40% of the AI server market by 2025, reducing reliance on foreign chips [10] - Local AI chip manufacturers are gaining market share, with significant contracts awarded to companies within the Huawei Ascend ecosystem, indicating a shift towards domestic solutions [11][12] Challenges Ahead - Despite the potential re-entry of H20, NVIDIA faces intense competition from local players who have established a strong foothold in the AI infrastructure market [9][12] - The need for Chinese customers to adapt to NVIDIA's compliance-driven performance adjustments poses a challenge, as they have invested in local AI infrastructure [12]