NVIDIA is in a muddle as the US govt. bars unbridled sales of H20 chips in China.
Owing to the company’s latest filing, its shares were down 6% in after-hours trading. Now, the chip designers expect a $5.5 billion financial hit. These chips have become paramount in AI’s most valuable markets – model deployment and inference.
The H20 chips were designed very meticulously for China’s market, taking into account the previous US export limitations. The need for a special license is a strategic step by the US.
It’ll significantly subdue China’s access to cutting-edge AI hardware and other infrastructure for the indefinite future. The fears are fairly rational.
The use of H20 chips could afford a computing edge to Chinese supercomputers, a major setback for American tech giants.
The US has been locked in an intense battle with China to reign over the AI race since DeepSeek rattled the market a few months ago. And the latter’s accessibility to these chips could bolster the competition’s power.
In the race to become the AI superpower, this is the US’s preventive measure.