nvidia's h20 chip faces china ban: stock volatility ensues

2025-03-05 nvidia

Santa Clara, Wednesday, 5 March 2025.
nvidia’s stock is experiencing turbulence. the potential ban of its h20 chip exports to china looms large. this could hand over the chinese ai market to rivals like huawei. investors are on high alert. a complete ban could drastically cut nvidia’s revenue and market dominance. meanwhile, singapore is investigating potential chip smuggling, adding another layer of uncertainty. nvidia’s valuation is nearing a 10-year low, according to bernstein.

H20 chip ban details

The potential ban stems from restrictions detailed in ECCN 4A0030.C, limiting single-precision computing to 70 TFLOPS [3]. Nvidia’s H20 chip exceeds this limit with a single-precision computing performance of 74 TFLOPS [3]. This regulation impacts not only China but also other countries, including Afghanistan and Russia [3]. The U.S. government has a ‘presumed denial’ policy for exports to China, Macau, and Hong Kong [3].

Circumventing export controls

Despite U.S. export controls, Chinese buyers are finding ways to acquire Nvidia’s AI chips [5]. They are using neighboring countries as transit points [5]. These traders provide servers containing Blackwell chips, with some promising delivery within six weeks [5]. This circumvention involves companies registered outside China purchasing Nvidia servers from businesses in Malaysia, Vietnam, and Taiwan [5]. These businesses might include data center operators and authorized Nvidia clients [5].

Nvidia’s response and market dynamics

Nvidia has stated it will investigate potential resales and take appropriate action [5]. The company emphasizes that authorized channels provide essential services and technical support that anonymous dealers cannot [5]. Chinese distributors indicate that a Blackwell server with eight AI processors could retail for over $600,000 in China [5]. The H200 chip remains a popular choice, with servers containing eight H200 chips selling for around $250,000 [5]. Major Chinese firms like Alibaba, Tencent, and ByteDance are actively procuring H20 chips [5].

Singapore investigation

Singapore is investigating a fraud case involving servers shipped to Malaysia that may contain Nvidia chips violating U.S. export rules [7]. K. Shanmugam, Singapore’s Law Minister, indicated uncertainty about Malaysia being the final destination and confirmed an independent investigation based on an anonymous tip [7]. The investigation is also linked to the alleged transfer of Nvidia AI chips from Singapore to the Chinese AI company DeepSeek [7]. Singapore accounts for 18% of Nvidia’s total revenue [7].

Stock performance and analyst views

Nvidia’s stock has experienced volatility amid these concerns [6]. On March 3, 2025, the stock dropped by 8.69%, closing at $114.06 per share [6]. Bernstein analysts suggest Nvidia’s valuation is nearing a 10-year low [2]. One analyst noted that the potential ban could significantly impact Nvidia’s revenue projections [6]. The situation is being closely monitored by market analysts [6].

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h20 chip china ban