The Trump administration reported on Monday to US Chip Manufacturers Nvidia that export their powerful H20 chips to China, and several other nations, will have to meet the new license requirements.
Nvidia said the restrictions meeting could cost the company up to $ 5.5 billion.
Nvidia was informed The new license requirement, which will remain indefinitely, “addresses the risk that covered products can be used or diverted to a supercomputer in China.”
The H20 chip is not the most powerful product in the Nvidia inventory, but, until now, it has the leg that the most powerful chip that Nvidia could legally sell to China.
The CEO of Nvidia, Jensen Huang, offers an opening speech at the Consumer Electronics Show (CES) in Las Vegas, Nevada, on January 6, 2025. (Patrick T. Fallon/AFP/Getty Images)
The Biden administration restricted the sale of more advanced chips to China in 2022. NVIDIA worked around the restriction by reducing the capabilities of its popular H100 chip until it fell below the export limit and created the H20, a product soldier to China.
China used H20 for create Deepseek, a new artificial intelligence (AI) that shook world markets when it was introduced at the end of last year, sacrificed high -level performance to a price fraction. According to its creators, one of the reasons why Deepseek developed so cheap was that its physical architecture used those low -cost Nvidia chips.
Deepseek’s sensational debut led Chinese technology companies to order More than $ 16 billion in H20 chips. Consequently, Nvidia increased production and now fears that it will have an inventory accumulation that it cannot sell, since there is no demand for H20 outside China. The unique nature of the H20 could relieve that problem a bit, since part of the frozen export inventory could be H100 chips that have not yet been “strangled” to the lowest specifications of H20.
A bigger long-term problem is that losing access to H20 could lead China to develop a comparable chip at the national level, probably through the Electronics Titan Huawei, potential-nvidia that loses its lucrative Chinese market for good. Nvidia registered $ 17 billion in sales to China last year.
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“Prohibit H20 makes little sense to us. The performance of H20 is low, well below old Chinese alternatives; a prohibition is that it is essential simply deliver the Chinese market of AI to the point of Huawei,” analyst Stacy Rasgon said Wednesday investors.
The left New York Times (NYT) Wednesday noted The policy of the Nvidia situation is complicated, since the main Democratic senator Elizabeth Warren of Massachusetts is strongly in favor of favor or restricting H20 sales to China.
Warren wrote a letter to the Secretary of Commerce Howard Lutnick on Monday urging H20 sales restrictions without “more delay” because he felt that even the cocked chip sold to China was powerful enough to endanger the national security of the United States, and because US companies have difficulties in obtaining all artificial intelligence chips they need.
Nvidia’s position on the matter also seems delicate, since CEO Jensen Huang invested a considerable effort to block export restrictions in the company’s chips. Just one day before the new restrictions were announced, the White House applauded Nvidia for committing $ 500 billion to make AI teams in the United States.
Nvidia’s actions were below Seven percent on Wednesday after the news of export restrictions broke. The NVIDIA H20 was not the only electronic export to China that was restricted on Monday; Another company, Advanced Micro Devices, also fell seven percent on Wednesday due to export restrictions, while chip manufacturers such as Qualcomm lost two to three percent of their value.
