Nvidia jumps on report of new AI chip tailor-made for Chinese market
Nvidia is taking a big inventory write-down on its prior attempt for a Chinese-specific AI chip in this week’s earnings report.
On Monday, Reuters reported that Nvidia is planning on retooling its new Blackwell chip to make a cheaper, though less powerful, version of the chips for sale to China.
Shares are up 2.5% in early trading on this impending addition to the already long list of Nvidia’s AI hardware.
This strong start to the day might help end an inauspicious span for the industry, with the VanEck Semiconductor ETF falling for seven straight sessions, its longest losing streak since September 2022. The fund is off 4.3% over this stretch, versus a 3% decline for Nvidia — a stock that recently suffered its largest exodus by retail investors in a decade.
Earlier this month, Nvidia CEO Jensen Huang emphasized the opportunity available in China’s AI market, saying it would likely reach about $50 billion in the next two to three years. He followed that up with comments last week saying export curbs on China have been “a failure,” hurting US businesses more than China.
While the US and China have taken high tariffs off the boil, semiconductors remain contentious territory. That was underscored by last week’s “demands” by China’s Ministry of Commerce that the US “correct its mistakes” pertaining to discouraging the use of Huawei’s AI chips.
The Trump administration recently scrapped measures from the Biden administration that restricted semi sales abroad. But these changes do more to help countries like Saudi Arabia get access to this advanced technology — hence the billions in deals with big AI players a couple of weeks ago — and effectively maintain the status quo for China.
According to Reuters, which reports that the new chips are slated for mass production as early as June, an Nvidia spokesperson said, “Until we settle on a new product design and receive approval from the US government, we are effectively foreclosed from China’s $50 billion data center market.”
Nvidia has warned of a $5.5 billion write-down to the value of its inventory coming in Wednesday’s earnings report after the US government crimped its ability to sell H20 chips to China.
