nvidia's ai chip supply to china at risk amid new regulations

2025-04-01 nvidia

Beijing, Tuesday, 1 April 2025.
a major nvidia distributor in china, h3c, warns customers of a potential shortage of h20 ai chips after april. this shortage may be caused by new energy-efficiency regulations considered by the national development and reform commission, which could ban the chips in new ai infrastructure. if implemented, chinese companies may turn to domestic alternatives like huawei and cambricon, impacting nvidia’s revenue and market share. the move comes amid china’s push for technological self-sufficiency in ai.

china’s ai landscape and nvidia’s h20 chip

H3C, a prominent server manufacturer in China, has issued a warning to its clientele regarding a potential scarcity of NVIDIA’s H20 AI chip, casting doubt on the consistency of supply beyond April [1]. This shortage could significantly threaten NVIDIA’s foothold in the Chinese market, particularly as demand for AI chips surges and competition from local manufacturers intensifies [1]. Companies such as Huawei and Cambricon are actively advancing their AI chip technologies, further intensifying competition [1]. China is striving for technological independence to lessen its reliance on Western hardware for AI applications [1].

market reaction and nvidia stock performance

NVIDIA’s stock (NVDA:NASDAQ) closed at $109.67 on March 28, 2025, marking a 1.58% decrease and the fourth consecutive day of decline [3]. The stock experienced a 3.47% fluctuation on that day, hitting a low of $109.08 and a high of $112.87 [3]. Trading volume saw a reduction of 8 million shares, with a total of 228 million shares exchanged, valued at approximately $24.99 billion [3]. The stock is anticipated to decrease by 17.99% over the next three months, potentially fluctuating between $82.36 and $104.93 [3].

regulatory impact and domestic competition

The National Development and Reform Commission (NDRC) in China is mulling over strict energy-efficiency regulations for data centers, which could lead to a ban on NVIDIA’s H20 chips in new AI infrastructure [1]. Should these regulations be enforced, Chinese firms might pivot to domestic AI chip vendors [1]. Huawei’s Ascend AI chips already handle over 30% of China’s AI workloads [1]. Cambricon’s deep-learning accelerators are utilized by Baidu and Alibaba in their cloud AI platforms [1]. SMIC is also boosting its local semiconductor manufacturing capabilities [1].

tsmc’s advancements and broader market dynamics

TSMC’s Kaohsiung plant, focusing on 2nm technology, commenced operations on April 1, 2025 [2]. TSMC’s EVP projects that its 2nm tape-outs will surpass 3nm within two years, estimating an end-product value of $2.5 trillion over five years [2]. Micron anticipates record revenue this quarter, integrating HBM3E 12H into NVIDIA’s GB300 [2]. However, NVIDIA’s GB300 is facing potential delays, with customer testing possibly pushed to the fourth quarter [7]. These shifts occur amidst the ongoing US-China tech war, with the U.S. adding Chinese companies, including Inspur Group, to a trade blacklist [7].

Bronnen

nvidia chip shortage