Core Viewpoint - The article discusses the recent agreement between NVIDIA and AMD to pay a 15% "toll" to the U.S. government in order to maintain access to the Chinese market, highlighting the importance of this market for both companies [4][6]. Group 1: Market Impact - NVIDIA and AMD's stock prices did not experience significant declines following the announcement, indicating a generally optimistic outlook from Wall Street regarding the deal [6]. - The agreement allows NVIDIA and AMD to retain 85% of their revenue from exports to China, which is crucial for their financial health [6][15]. - The Chinese market is described as a "second granary," emphasizing its critical importance for the survival of both companies [8]. Group 2: Financial Implications - NVIDIA reported a $4.5 billion inventory impairment and related expenses for the first quarter of fiscal year 2026, which accounted for 20.54% of its pre-tax profit [9]. - Prior to the restrictions, NVIDIA's H20 product generated $4.6 billion in sales, and the company missed out on $2.5 billion in revenue due to the sales limitations [9]. - For AMD, the restrictions led to approximately $800 million in inventory and related costs, resulting in a significant drop in its non-GAAP gross margin from 54% to 43.28% year-over-year [11]. Group 3: Competitive Landscape - The article warns that the U.S. government's intervention may lead to performance limitations on the chips exported to China, potentially driving Chinese customers towards local suppliers like Huawei [7][15]. - Both companies face the risk of losing their competitive edge in the Chinese market if they cannot meet local demands effectively [15][16]. - The rapid development of China's AI industry is expected to sustain high demand for chips, making it essential for NVIDIA and AMD to navigate the political landscape carefully [16].

Market Overview - A-shares experienced a sudden decline, with the three major indices dropping over 1% in the afternoon session, which was unexpected [1][4] - The Shanghai Composite Index closed down 1.18% at 3573.21 points, the Shenzhen Component Index fell 1.73% to 11009.77 points, and the ChiNext Index decreased 1.66% to 2328.31 points [1][2] - Nearly 4300 stocks in the market declined, indicating a broad-based sell-off [1] Trading Volume and Market Sentiment - The trading volume for the day reached 1.96 trillion yuan, an increase of 917 billion yuan compared to the previous trading day, indicating heightened market activity [2][4] - The market sentiment was mixed, with only a few sectors like assisted reproduction and liquid cooling IDC showing positive performance, while cyclical sectors like steel and coal faced significant declines [1][4] Sector Performance - Cyclical sectors, which had previously been performing well, saw a collective downturn, with stocks like Anyang Iron & Steel and Antai Group dropping over 7% [1][4] - The financial sector also struggled, with stocks such as China Zhongjin Securities and China Life Insurance falling more than 4% and 5% respectively [1] External Factors Influencing the Market - The recent adjustment in A-shares may be attributed to several factors, including profit-taking by investors after a period of gains, particularly in cyclical stocks and innovative pharmaceuticals [4] - Concerns over the security risks associated with Nvidia's H20 computing chips, which were recently allowed to resume sales in China, have also contributed to market volatility [4][5] - The release of July's manufacturing PMI, which showed a slight decline to 49.3%, indicates a cooling in manufacturing activity, further impacting market sentiment [6] Future Outlook - Analysts suggest that while core indices may challenge their yearly highs, the path forward may not be smooth, necessitating close attention to policy implementation, economic data validation, and external environmental changes [7]

Core Viewpoint - Nvidia has received export licenses from the Trump administration to sell H20 chips to the Chinese market, responding to strong demand and placing an order for 300,000 units with TSMC to supplement its existing inventory of 600,000 to 700,000 units [1][5]. Group 1: Nvidia's Market Strategy - Nvidia's CEO Jensen Huang announced the approval for H20 chip sales to China during his recent visit, indicating a shift in strategy from relying solely on existing inventory [1][2]. - The H20 chip is designed specifically for the Chinese market and is based on Nvidia's Hopper architecture, featuring advanced packaging technology [1]. - Despite the approval, Nvidia has informed Chinese customers that the supply of H20 chips will be limited and there are no plans to restart production [2]. Group 2: Financial Performance and Market Position - In the fiscal year ending January 2024, Nvidia's revenue from China reached $17.108 billion, a 66% increase from $10.306 billion the previous year, marking the highest revenue from the Chinese market [5]. - However, the share of China in Nvidia's overall revenue structure has decreased from 26.42% in 2021 to 13.11% in 2024 [5]. - During Nvidia's absence in the Chinese market, domestic companies have been advancing their own chip technologies, with the market share of domestic computing power in China's data center accelerator card market rising from 14% to 34.6% from 2023 to 2024 [5]. Group 3: Industry Implications - The lifting of the ban on H20 chip sales has led to increased competition among domestic GPU manufacturers, who have capitalized on the market gap left by Nvidia [5]. - The Chinese Ministry of Commerce has called for the U.S. to eliminate unreasonable trade restrictions and promote a cooperative environment for mutual benefit [6].

Group 1 - Huang Renxun announced two major news upon arriving in China: the resumption of H20 chip sales in China and the creation of a dedicated RTX Pro GPU product for the Chinese market [1] - Nvidia's stock surged, reaching a market value of $4.17 trillion, surpassing Japan's GDP from the previous year, indicating strong market confidence [1] - The lifting of the H20 ban allowed multiple tech companies in China to quickly place orders, alleviating some chip supply issues [1] Group 2 - Prior to his visit to China, Huang Renxun met with Trump at the White House, likely to gauge China's stance towards the U.S. and facilitate his visit [2] - Recent reports suggest that Trump's attitude towards China has softened, aiming for a trade agreement and a potential summit with Chinese leaders [2][10] - Trump's administration has been under pressure from various sectors, particularly agriculture, due to the impact of tariffs, necessitating a more conciliatory approach towards China [8] Group 3 - Huang Renxun's visit is seen as a precursor to a larger business delegation led by Trump, indicating his role in fostering a positive atmosphere for U.S.-China dialogue [3] - During his visit, Huang Renxun engaged with several Chinese tech giants and officials, showcasing Nvidia's commitment to the Chinese market [3][5] - His actions, including wearing traditional Chinese attire and attempting to speak Chinese, were interpreted as efforts to strengthen ties with China [7] Group 4 - The Trump administration's need to ease tensions with China is driven by the impending expiration of a 90-day tariff ceasefire, with potential consequences for U.S. industries if no agreement is reached [8] - The rising costs from tariffs have led U.S. manufacturers and retailers to struggle, prompting the need for dialogue with China to alleviate economic pressures [8] - Huang Renxun's visit serves as a bridge for U.S. tech companies to signal their desire for continued cooperation with China, potentially easing trade tensions [8][10]

Investment Rating - The report rates the electronic industry as "Outperform" compared to the market [1] Core Insights - The PCB sector continues to lead the electronic industry, with the SW electronic industry index increasing by 2.15% compared to the 1.09% rise in the CSI 300 index [1] - The report highlights significant advancements in domestic EUV lithography machines, with expectations for trial production in Q3 2025 [4][5] - The global lithography equipment market is projected to reach $29.57 billion in 2024, reflecting a year-on-year growth of 9% [5][15] - The domestic lithography machine industry is gradually taking shape, supported by substantial government funding exceeding 600 billion RMB [25][26] Summary by Sections 1. Lithography Machines: The Core of Semiconductor Industry - Lithography machines are essential for transferring circuit patterns onto silicon wafers, utilizing light sources and masks [6][8] - The technology has evolved significantly, reducing the wavelength used in lithography from 436nm to 13.5nm, enabling the production of 7nm process node chips [11][13] 2. Market Landscape of Lithography Machines - The global lithography equipment market is expected to grow at a CAGR of 5% from 2024 to 2034, reaching $37.81 billion by 2029 [5][15] - ASML dominates the market with a 61% share, followed by Canon and Nikon [18][20] 3. Domestic Lithography Machine Industry Chain - The domestic industry is supported by three national funds, with investments totaling over 600 billion RMB since 2014 [25][26] - Key players include Shanghai Microelectronics and Xinkailai, focusing on advanced EUV lithography machines [25][26] 4. Investment Opportunities - The report suggests focusing on companies involved in the domestic semiconductor supply chain, including optical systems and key materials suppliers [1][25][26]

Group 1 - Nvidia's CEO Jensen Huang announced the approval for the export of the H20 chip to China, which is designed specifically for the Chinese market and is based on the Hopper architecture [2][39] - The H20 chip is an AI accelerator that is not capable of training trillion-scale models but has slightly better performance than the 910B model [2] - Nvidia is also set to launch a new graphics card named RTX Pro, which is designed for computer graphics, digital twins, and artificial intelligence applications [2] Group 2 - Huang expressed optimism about China's unique advantages in developing humanoid robots, citing excellent AI technology, outstanding mechatronics, and a large manufacturing base [3][10] - He noted that Huawei's AI chips could potentially replace Nvidia's in AI training, indicating a competitive landscape in the AI sector [3][10] - Huang highlighted the rapid development of AI in China, with over 1.5 million developers working on Nvidia's platform and significant contributions from Chinese companies like Alibaba and Tencent [3][6] Group 3 - The next wave of AI development is expected to focus on robotic systems that can reason and execute tasks, transforming factories into AI-driven environments [4][10] - Nvidia's Omniverse is being utilized in hundreds of projects in China for simulating digital twins, optimizing factory designs, and training robots in virtual environments [4][10] - Huang emphasized the importance of open-source AI as a catalyst for global progress and collaboration in technology standards and safety measures [4][10] Group 4 - The Chinese AI model Kimi K2 has gained recognition, ranking first in global open-source model competitions, showcasing China's advancements in AI technology [34][49] - The Chinese government has opened over 5.5 million training data sets for humanoid robots, accelerating applications in various fields [29] - China's industrial robot exports have seen a significant increase of 61.5% in the first half of the year, reflecting the country's growing capabilities in robotics [65]

Investment Rating - The industry investment rating is "Outperform the Market," indicating that the industry index is expected to perform better than the benchmark index over the next 6-12 months [31]. Core Insights - The report highlights a resonance in AI development both domestically and internationally, driven by the launch of OpenAI's general-purpose AI Agent and advancements in large models [11][12]. - The introduction of the world's first RMB tokenized fund by Huaxia Fund (Hong Kong) is noted, which enhances the offshore RMB hub status of Hong Kong and improves transparency and settlement efficiency through blockchain technology [14]. - NVIDIA's H20 chip has received export approval to China, which may alleviate the short-term shortage of inference computing power, while the launch of the RTX Pro GPU is expected to accelerate industrial robot and autonomous driving transformations [15][16]. Summary by Sections AI Development - OpenAI released the ChatGPT Agent, integrating various tools for enhanced human-computer interaction, achieving significant performance in benchmark tasks [11][12]. - The Kimi K2 model, launched by Moonshot AI, is the largest open-source model to date, demonstrating superior capabilities in coding and task execution [12][13]. Financial IT Sector - Huaxia Fund (Hong Kong) launched the first RMB tokenized fund, which allows investors to subscribe or redeem through traditional and digital channels, filling a gap in RMB on-chain income-generating assets [14]. Chip and Computing Power - NVIDIA's H20 chip, while limited in performance compared to its flagship models, is expected to support vertical model inference and may impact local chip manufacturers [15][16]. - The RTX Pro GPU is designed for digital factories and robotics, enhancing sensor simulation capabilities crucial for industrial applications [16]. Company Recommendations - The report suggests focusing on companies in the large model, computing power, and financial IT sectors, including Keda Xunfei, Kingsoft Office, and others [4].

Core Insights - Nvidia has informed its Chinese customers about limited supply of the H20 AI chips, which are a "downgraded" version of its flagship H100, accounting for 80% of its revenue in China [1] - The U.S. government has recently approved the sale of H20 chips to China, and Nvidia is working to ramp up production to meet existing orders [2][4] - Despite the approval, the domestic Chinese chip industry is rapidly advancing, with local companies increasing their market share during Nvidia's absence [6] Group 1: Nvidia's H20 Chip Situation - Nvidia's H20 chip, designed to comply with U.S. export controls, has a performance of only 15%-30% compared to the H100, leading to a projected loss of $5.5 billion due to the sales ban [1] - Following the ban, Nvidia canceled customer orders and relinquished production capacity at TSMC, which has since been allocated to other clients [1] - Nvidia's CEO Jensen Huang stated that many orders for H20 chips are already in place, but the company needs time to enhance supply chain capacity [4] Group 2: Market Dynamics and Competition - Nvidia's market share in China has dropped from 95% four years ago to 50% currently, indicating a significant loss in its competitive position [5] - In the fiscal year ending January 2024, Nvidia's revenue from China reached $17.108 billion, a 66% increase from the previous year, but its share of overall revenue fell from 26.42% to 13.11% from 2021 to 2024 [5] - The domestic chip industry is capitalizing on the gap left by Nvidia and AMD, with local companies increasing their market share in the data center accelerator market from 14% to 34.6% [6] Group 3: U.S.-China Trade Relations - The approval for H20 chip sales is part of broader U.S.-China trade negotiations, with the U.S. aiming to prevent China from achieving self-sufficiency in chip production [7] - The Chinese government has expressed the need for the U.S. to eliminate unreasonable trade restrictions and promote a cooperative environment for mutual benefit [7]

Core Insights - A significant market battle worth billions is unfolding, highlighted by a recently surfaced photo of Nvidia's CEO Jensen Huang and Xiaomi's CEO Lei Jun, marking their first public appearance together in 12 years [1][3] Group 1: Nvidia's Strategic Moves in China - Jensen Huang's frequent visits to China in 2025, including three trips to major cities, indicate Nvidia's focus on penetrating the Chinese market, especially after facing a $13.5 billion revenue loss due to U.S. export restrictions [4][5] - Nvidia's approval to export the H20 chip to China is a crucial development, allowing the company to resume sales in a market that contributes $17.1 billion annually to its revenue [4] - The introduction of the RTX Pro GPU, designed for AI applications, aligns with U.S. export regulations, showcasing Nvidia's adaptability in the face of geopolitical challenges [5] Group 2: Transition to AI Infrastructure - Nvidia is transitioning from a hardware supplier to an AI infrastructure provider, as evidenced by the announcement of the NVLinkFusion architecture, which supports third-party CPU and AI accelerator integration [7] - This technology offers a bandwidth of 900GB/s, significantly surpassing traditional protocols, positioning Nvidia as a key player in the evolving AI landscape [7] - Huang's statement that "China has sufficient computing power" reflects a strategic shift towards collaboration and ecosystem building rather than maintaining a monopoly [7] Group 3: AI Factories and Robotics - Nvidia's strategy in China includes establishing "AI factories," which represent a shift from traditional data centers to AI-driven operations, aiming to create value through continuous data generation [9][10] - The potential of humanoid robots as a trillion-dollar industry is highlighted, with China serving as a critical commercialization hub due to its lower manufacturing costs and technological advantages [11] - Nvidia's collaboration with local companies like Xiaomi is essential for integrating AI capabilities into various sectors, leveraging China's manufacturing strengths [13] Group 4: Strategic Partnership Dynamics - The renewed partnership between Huang and Lei signifies a deeper strategic alignment, as both companies have evolved from hardware manufacturers to ecosystem builders [17] - The mutual need for collaboration arises from Nvidia's requirement for local partners to maintain influence amid U.S. restrictions and Xiaomi's need for advanced computing power to enhance its automotive technology [18] - The partnership is seen as a pragmatic approach to balancing political risks and commercial interests, with both companies benefiting from shared technological advancements [18]

Investment Rating - Industry rating: Recommended [4] Core Views & Investment Suggestions - The recovery of H20 chip sales to China signals positive developments in US-China relations, with the approval of H20 chip sales and the introduction of RTX Pro GPU designed for the Chinese market by Nvidia's CEO [2][24] - The chip ban lift is seen as a pragmatic breakthrough in US-China technological cooperation, alleviating domestic computing power bottlenecks and reinforcing the effectiveness of the Geneva framework [2][24] - The regulatory emphasis on rational competition among major food delivery platforms like Ele.me, Meituan, and JD.com aims to curb irrational subsidies and promote a healthy, sustainable development of the food service industry [2][24] - The report maintains a cautious optimism regarding trade negotiations and continues to favor leading Chinese technology firms, suggesting that companies with foundational technology capabilities will gradually demonstrate their long-term investment value [3][25] Market Overview - During the week of July 14-18, 2025, the Shanghai Composite Index rose by 0.69%, the CSI 300 Index increased by 1.09%, and the ChiNext Index saw a rise of 3.17% [1][11] - The Hang Seng Index increased by 7.39%, while the Hang Seng Internet Index rose by 2.84%, with the media sector lagging behind the Hang Seng Index by 4.55 percentage points [1][11] - The SW Media Index fell by 2.24%, ranking last among 31 industries in terms of performance [1][11] Sub-industry Data Film Industry - The top three films by box office for the week were "The Lychee of Chang'an" with 121.17 million yuan (21.4% market share), "Liao Zhai: Lan Ruo Temple" with 76.42 million yuan (13.5%), and "The Legend of Hei 2" with 65.84 million yuan (11.6%) [27][28] Gaming Industry - The top three iOS games by revenue were "Honor of Kings," "Delta Force," and "Peacekeeper Elite," while the top three Android games were "Heart Town," "Honkai: Star Rail," and "My Leisure Time" [30][31] TV Series Industry - The top three TV series by broadcast index were "Morning Snow Record" (82.5), "Splendid Blossoms" (81.4), and "Book Scroll Dream" (81.1) [32][33] Variety and Animation - The top variety show was "Running Man Season 9" with a broadcast index of 80.5, followed by "Comedy King Stand-up Season 2" and "New Rap 2025" [34] - The top three animated shows were "Cang Yuan Tu" (352.3), "Happy Hammer" (259.9), and "Xian Ni" (232.7) [36]