The current developments surrounding NVIDIA and the US export restrictions demonstrate a complex dynamic between geopolitical tensions, corporate strategies, and market reactions:
Background of the Export Restrictions
The US has prohibited the export of the NVIDIA H20 chip specifically developed for China starting April 2025. This chip was a stripped-down version designed to comply with previous export regulations but has now been classified as a potential security threat — particularly due to its possible use in Chinese supercomputers.
Response from Chinese Tech Giants
Companies such as ByteDance, Alibaba, and Tencent collectively secured around 1 million H20 chips worth over 12 billion USD before the restrictions come into effect. This represents an annual supply and reflects the fear of supply shortages. ByteDance acted particularly aggressively, massively stockpiling inventory. Orders were strategically placed before the cut-off date to allow for delivery under the old rules.
Impact on NVIDIA
- Financial Losses: NVIDIA expects revenue losses of up to 5.5 billion USD in Q1 2025, primarily due to the loss of the China business.
- Market Reaction: The stock lost up to 6% in after-hours trading following the announcement of restrictions, resulting in a market value loss of around 180 billion USD the next day.
- Long-term Risks: China generated between 12-15 billion USD in revenue for NVIDIA in 2024 — a significant portion of the business model.
Technological Policy Implications
The incident underscores the increasing fragmentation of global supply chains:
- Chinese companies are actively seeking alternatives (e.g., domestic chip manufacturers), which could exert long-term pressure on Western technological dominance.
- The H20 deal simultaneously highlights the current dependence of Chinese AI research on NVIDIA hardware.
For investors, the critical aspects remain:
- Short-term volatility due to geopolitical shocks vs. long-term growth potential in the AI sector
- Need for new markets outside China for NVIDIA to compensate for regulatory risks.
Despite current turmoil, analysts emphasize NVIDIA’s unbroken innovation potential in key areas such as Generative AI and Cloud Computing — factors that could favor price increases in the medium term.