Nvidia whipsawed by report that China’s internet regulator barred companies from ordering its chips
Plot twist!
Nvidia briefly erased all of its premarket gains of 1% after The Information reported that China’s internet regulator has “ordered local tech companies including ByteDance, Alibaba Group, and Tencent Holdings to suspend their purchases of Nvidia chips, citing data security concerns with the chips, according to three people briefed on the matter.”
Per The Information, this decision was made shortly after reports surfaced that Nvidia would be allowed to sell its H20 chips to China once again.
Chinese demand for these processors had reportedly been white-hot, with Reuters saying that Nvidia quickly reversed plans to sell down just its existing inventory and instead ordered an additional 300,000 chips from TSMC.
I’m so old, I remember when US national security concerns were the reason these chips couldn’t be sent to China. That is, I was born before mid-April 2025, when those export restrictions were put in place.
Nvidia recently reached an agreement with the US government to receive export licenses for the H20 in exchange for providing 15% of revenues generated from their sale to the US government.
The chip designer’s calendar 2025 sales estimates hadn’t been rising too briskly following reports that it regained access to what CEO Jensen Huang called a $50 billion AI data center market, suggesting that analysts had been slow to incorporate any potential top-line boost into their forecasts just yet.
Nvidia took a $4.5 billion impairment charge in its Q1 earnings report related to this loss of its China business, and said that its Q2 revenue forecast would have been $8 billion higher if not for the export curbs.
