You might find it surprising, but the US’s attempt to clamp down on semiconductor exports to China could end up giving China’s chip industry a significant boost. As the US tightens its licensing requirements for selling chips to China, companies like Nvidia and AMD are bracing for some hefty financial hits. Nvidia is looking at a potential $5.5 billion impact, while AMD could be facing up to $800 million in losses, according to their recent SEC filings.
Jack Gold, a principal analyst at J.Gold Associates, put it quite bluntly: “The US government is basically handing China a golden opportunity to build up its own chip business.” Once China catches up in terms of competitiveness, Gold believes their chips will flood the global market, putting a serious dent in US dominance.
New rules mean Nvidia now needs to get authorization to export its H20 chips to China, primarily due to concerns about their potential use in Chinese supercomputers. This is a big hurdle, especially since these chips were originally designed with the Chinese market in mind.
Rob Enderle, an independent tech analyst, predicts that Chinese companies, possibly led by Huawei, will ramp up efforts to dominate the semiconductor landscape. “This could quickly shift leadership in microprocessors and GPUs to China,” Enderle noted, highlighting the vast resources and determination of the Chinese government.
The US strategy, which aims to slow down China’s progress, might end up isolating US firms and making foreign companies more competitive. Nvidia CEO Jensen Huang echoed this sentiment, saying the company plans to comply with US requirements without stalling technological progress.
Wedbush analyst Dan Ives stressed Nvidia’s pivotal role in the AI sector, pointing out that the current US restrictions are a strategic move to slow China’s advancements. However, he warned that this semiconductor standoff is far from over, and we can expect more moves from both sides.
