Challenge due to Tightened US Export Rules
NVIDIA is facing significant challenges due to the tightened US export regulations, which severely restrict the sale of its high-performance AI chips to China. The Trump administration has introduced new licensing requirements that effectively amount to an export ban on certain chips, such as the H20 chip specifically designed for China. This is expected to lead to a financial setback of approximately $5.5 billion for NVIDIA due to inventory write-downs and purchase obligations.
New Strategies to Preserve Business in China
Despite these difficulties, NVIDIA plans a new strategy to avoid giving up its lucrative business in China and to compensate for potential losses. The company remains active in tapping into the Chinese market and is apparently trying to adapt to the new regulatory framework. However, it is expected that hardly any revenue can be generated with the H20 chip in China in the short term, as the licensing process is lengthy and there is currently little hope for quick approvals.
Global Implications and Corporate Strategy
This situation clearly illustrates the tensions in technological transfer between the US and China and their effects on global semiconductor companies like NVIDIA. While CEO Jensen Huang has publicly emphasized that America must not fall behind China in global AI development, NVIDIA must find pragmatic ways to remain present in the important Chinese market despite the restrictions.
In summary, NVIDIA is heavily burdened by the new US export rules and expects significant financial losses. Nevertheless, the company is pursuing a new strategy to save its business in China and remains actively involved in the market there – even though short-term revenue losses are inevitable.