US officials surprised NVIDIA’s big Chinese clients with new export rules on April 9. The rules require licenses to sell AI chips to China. NVIDIA’s H20 chip is affected. The company knew about the rules a week before telling customers.
NVIDIA expects a $5.5 billion hit to its China sales in the first quarter. They need to rearrange stockpiles and change how they do business. The new rules have no end date.
Some big Chinese cloud companies still expect H20 chips by year-end. They didn’t know about the new rules. NVIDIA’s sales team in China was also unaware.
Big Orders, New Challenges
In early 2024, NVIDIA got orders worth $18 billion for H20 chips from Chinese customers. China made up 13% of NVIDIA’s total revenue last year.
US rules might push Chinese customers to Huawei’s AI chips. Nori Chiou from White Oak Capital Partners says this could help Huawei’s chips get better faster. More customers and developer experience can speed up progress.
What’s Next
The impact of US rules on NVIDIA’s China sales is uncertain. The company’s ability to adapt will be key. The tech industry is watching closely.
Source: Reuters