The US is softening its export restrictions to China. At the beginning of July, the administration led by Donald Trump allowed NVIDIA to sell its H20 GPU to its Chinese clients. This movement surprised many because it clearly indicated that an obvious change was consolidating in the US strategy regarding the nation governed by Xi Jinping. According to the newspaper Financial Times, this relaxation of export restrictions to China seeks to “avoid damaging trade negotiations with Beijing.”
It is presumed that this week the USA and China will resume their negotiations to establish the rules that will resolve their future commercial interests. As expected, this shift in the US administration favors the interests of NVIDIA, AMD, Broadcom, and other companies, but not all members of the Trump administration support this initiative. According to the Financial Times, some White House advisors are pressing the government to maintain their blockade on China.
NVIDIA Needs TSMC to Manufacture 300,000 H20 Chips for China
Donald Trump wants to meet “face to face” with Xi Jinping before the end of this year, again according to information from the Financial Times. The intention of the US president is to smoothen relations with his Chinese counterpart to promote negotiations in commercial matters that both countries have maintained for several months. Just a few hours ago, Scott Besent , the US Treasury Secretary, and He Lifeng , the Vice Prime Minister of China, gathered in Stockholm (Sweden), indicating that the negotiations are ongoing.
<img alt="Intel faces immense challenges ahead. Your survival hinges on the strategy currently being implemented" width="375" height="142" src="https://i.blogs.es/57a812/intel-ap/375_142.jpeg"/>After many months of uncertainty, the current scenario clearly benefits NVIDIA . The company, directed by Jensen Huang , saw its survival in China threatened by the sanctions approved by the US Department of Commerce , but this volte-face changes everything . The primary focus is the chip for artificial intelligence (AI) , the H20. The initial reception by Chinese clients was very positive, despite the fact that the capabilities of this chip are clearly inferior to other proposals offered by the company.
After many months of uncertainty, the current scenario clearly benefits NVIDIA.
Initially, the Department of Commerce allowed its sale in China because this integrated circuit complied with the imposed restrictions . Despite its limitations, sales in China grew by 50% quarter to quarter since it reached this market in mid-2024. Everything changed for NVIDIA in mid-April when the US Department of Commerce imposed new export restrictions on the H20 GPU, effectively halting its sales to Chinese clients.
The news caused NVIDIA’s stock to plummet by 6% , as it could no longer meet the commitments tied to the H20 GPU. Among the Chinese customers who had acquired large quantities of this GPU, expecting to continue their purchases, were Tencent , Alibaba , and Bytedance . Ultimately, NVIDIA managed to persuade the Department of Commerce to review its regulations and again allow the sale of the H20 GPU in China.
Ironically, this change has created a dilemma for NVIDIA. The reception of the H20 GPU in China has been so positive that this American company now finds itself out of stock . According to Reuters, NVIDIA has commissioned TSMC to manufacture an astounding 300,000 units of this chip to meet current demand from China—a blessed problem . However, the company’s engineers have also been diligently working on a new GPU featuring state-of-the-art Blackwell Microarchitecture , intended to take the place of the H20 chip in China.
In fact, TSMC is presumed to have begun production of the upcoming B30 GPU in June. Early reports indicate that this AI-focused chip will be less capable than the H20 GPU, as one would expect, and its price is projected to range between $6,500 and $8,000 . Although this may seem steep for domestic users, it is comparatively moderate in the realm of professional AI GPUs. For context, the H20 GPU retails between $10,000 and $12,000 .
Image | Gage Skidmore | Wikipedia
For more insights, check out the articles from the Financial Times and Reuters.
In Xataka, the recent changes in regulation present a pivotal opportunity for companies like Huawei , as they may now access high-quality AI chips amid the evolving landscape of the NVIDIA market in China.