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Luke Kawa

Nvidia reportedly halts H20 production after Chinese security decree clouds demand outlook

Shares of Nvidia are down in premarket trading after The Information reported that the chip designer has told two suppliers that put the finishing touches on its H20 processors — the chips it recently received licenses to sell to China once again — to suspend production work.

This news follows a report earlier this month that China’s internet regulator told major domestic tech giants like ByteDance, Alibaba, and Tencent not to purchase these chips because of data security concerns. Per The New York Times, Nvidia CEO Jensen Huang said he already made it “very clear” to Chinese regulators that their worries about backdoor access to these chips are unfounded.

The H20 has been a giant, multibillion-dollar headache for Nvidia and a flashpoint for the confusing geopolitical, commercial, and technological crosscurrents in the US-China relationship this year.

This nerfed version of Nvidia’s H100 chip was developed specifically for sale to China in response to export controls introduced by the Biden administration. Near the height of trade tensions with China in April, the Trump administration enacted fresh export restrictions on the sale of these chips. Nvidia took a $4.5 billion impairment charge in its Q1 earnings tied to this export ban, and said that its Q2 sales guidance would have been $8 billion higher if not for this change to trade policy.

After an intense public and private lobbying campaign, Nvidia (and Advanced Micro Devices) managed to receive assurances that they would be able to sell their tailor-made AI chips to China once again in mid-July. But the chip designers formally received those export licenses only after striking a novel deal to send 15% of revenues from those sales to the US government.

Nvidia had planned to sell down only its existing H20 inventory to China after it got the initial all-clear, but then reportedly elected to order more H20 chips from TSMC because demand for these processors was so hot — only to then see it seemingly doused by Chinese regulators.

Who knows what the twists and turns for the H20 mean for its successor model that’s in development, as China’s data security concerns surrounding the US chip designer’s products may be also colored by a desire to help promote domestic champion Huawei’s offerings.

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Luke Kawa

Google jumps, Nvidia and AMD fall on report that the search giant is in talks to sell “billions of dollars” of its custom AI chips to Meta

Google jumped in after-hours trading while Nvidia and Advanced Micro Devices dropped on the heels of a report from The Information that has the search giant muscling in on the chip designers’ turf.

Per the report, Meta is in discussions with Google to spend “billions of dollars” to use its AI chips in the social media company’s data centers starting in 2027, and to begin renting access to Google chips from its cloud business next year.

Historically, Google has rented access to these chips through its cloud business rather than supply them directly to third parties. The report suggests that insiders believe a more direct foray could allow the company to grab a market share in chips amounting to about 10% of Nvidia’s annual revenue.

Google’s AI chips — TPUs, or tensor processing units — are having a moment. These semiconductors were used to train its latest genAI model, Gemini 3, which has received rave reviews, and are cheaper to use than Nvidia’s offerings. That’s sent the stock to record highs, surpassing Microsoft in market value along the way.

According to The Information, Meta is even mulling using TPUs for training, considered a much more demanding task, rather than just inference alone.

Shares of Nvidia and AMD, which sell GPUs for use in data centers, fell about 2% in postmarket trading, while Google gained around 2%.

During Nvidia’s conference call last week, CEO Jensen Huang was asked about the competitive threat posed by custom chips. He responded by talking up the difficulty of inference (“How could thinking be easy?”). That’s a not-too-subtle nod to the idea that his company’s GPUs will be the more effective solution compared to more cost-effective options. He also touted the company’s CUDA software as a selling point, because it’s more commonly used and therefore makes it easier for its buyers to go on and sell AI computing capacity.

Google has aimed to make its JAX software easier for developers over time by making its TPUs operable via open-source software tied to PyTorch (invented by Meta), overhauling how errors are reported, and introducing an extension that makes it easier to write custom code, among others.

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