Core Viewpoint - The article discusses the complexities surrounding the reintroduction of NVIDIA's H20 chip in China, highlighting the implications for both compliance and market dynamics amid U.S. export regulations [2][5]. Group 1: H20 Chip Overview - NVIDIA announced the resumption of H20 sales in China, with the chip expected to account for 80% of NVIDIA's revenue in China in 2024, translating to sales of $12-15 billion [2]. - The U.S. government had previously restricted NVIDIA from exporting the H20 chip, leading to a $4.5 billion inventory impairment loss in Q1 FY2026, significantly impacting net profit and gross margin [2]. - H20 is specifically designed for the Chinese market, with no demand overseas, making it critical for NVIDIA to manage its inventory effectively [3]. Group 2: Market Dynamics and Demand - Major Chinese companies, including internet firms and financial institutions, have shown strong demand for H20, even during the ban, indicating a robust market for the chip [4][5]. - The lifting of the ban has created competition between compliant distributors and non-compliant resellers, with the latter facing pressure to offload their inventory [6][7]. - The pricing of H20 is relatively low, with a specific model priced around 1.28 million yuan, which may limit the potential for price increases in the market [6]. Group 3: Future Projections and Competitors - Analysts suggest that the reintroduction of H20 could fill a gap in the market until domestic chip suppliers ramp up production, potentially affecting future market dynamics [7][8]. - Upcoming products like the RTX Pro 6000 and B30 are expected to enter the market, but their performance and pricing may not match that of H20, leading to a competitive landscape [8]. - The article notes that the reintroduction of H20 represents a significant shift in the market, with potential implications for the decision-making of distributors and the overall demand for AI chips in China [8].

Core Viewpoint - Nvidia's H20 chip is expected to resume sales in China following U.S. government approval, indicating a shift in semiconductor export policies that may impact the domestic AI and semiconductor industries in China [1][4][15]. Group 1: Nvidia's Market Strategy - Nvidia's CEO Jensen Huang emphasized the importance of the Chinese market, stating that missing out on the projected $50 billion AI market in China over the next two to three years would be a significant loss [1]. - The recent approval for the H20 chip's sale in China comes after a period of restrictions that had previously halted its supply, reflecting a potential easing of U.S. semiconductor export controls [1][15]. - Nvidia's sales from the H20 chip amounted to $4.6 billion in the first quarter of fiscal year 2026, with $2.5 billion in orders unfulfilled due to the export ban, leading to $4.5 billion in costs from inventory and procurement commitments [4][12]. Group 2: Impact on Domestic Semiconductor Industry - The demand for H20 chips among domestic AI firms is not currently urgent, but long-term demand remains strong, as the CUDA ecosystem's usability is unmatched by domestic alternatives [10][11]. - The return of the H20 chip to the Chinese market is likely to trigger a surge in inventory stocking, which may negatively affect domestic alternatives [11]. - Despite the easing of U.S. export restrictions, the long-term trend towards domestic semiconductor alternatives in China is expected to continue, with domestic computing power's market share increasing from 14% to 34.6% from 2023 to 2024 [12][13]. Group 3: Future Challenges for Nvidia - Nvidia faces challenges in balancing cost and competitiveness as it introduces various "special edition" products for the Chinese market, such as the RTX Pro GPU [16][20]. - The upcoming B30 chip is rumored to have reduced specifications compared to the H100 and H20, which may further complicate Nvidia's position in the Chinese market [20]. - The shift of large model manufacturers towards domestic computing platforms may create a one-way transition, making it difficult for them to revert to Nvidia's ecosystem in the future [8][9].