ai chip export controls tightened amid us-china tech war

2025-04-18 general

washington, Friday, 18 April 2025.
the house select committee on the chinese communist party is pushing for stricter export controls on ai microprocessors. the aim is to hinder china’s access to advanced chips with military and surveillance applications. deepseek, a chinese firm, allegedly used us-made chips, circumventing existing restrictions to build its ai model. nvidia and amd could see revenue impacts. nvidia’s ceo, huang, met with trump to discuss h20 export restrictions. despite this, the h20 chip is now under export control, potentially costing nvidia $5.5 billion. the us is increasing pressure on china’s access to advanced technologies.

market reaction and nvidia’s response

Following the news of tighter export controls, nvidia’s stock experienced a sharp decline. On april 15, nvidia’s stock closed at $112.2 per share, a slight increase of 1.35% [2]. However, after the announcement, the stock plummeted by 6.3% in after-hours trading [2]. amd and broadcom also saw their shares dip by over 7% and nearly 4% respectively [7]. nvidia anticipates a $5.5 billion impact in its first-quarter financial results due to costs associated with the h20 product, including inventory and procurement commitments [2].

the h20 chip and its implications

The h20 chip was nvidia’s response to previous restrictions on ai chip exports to china [2]. It is a modified version of the h100, designed to meet u.s. export control regulations while still serving the chinese market [2]. despite being less powerful, the h20 was still in high demand, particularly from major chinese tech firms like tencent, alibaba, and bytedance [2]. these companies reportedly increased their orders for h20 servers after deepseek demonstrated its ai capabilities [2]. the price of an h20 server with 141gb of memory surged from ¥1 million to nearly ¥1.4 million due to concerns about the impending ban [2].

china’s response and push for self-reliance

China has protested the u.s.’s escalating export restrictions on ai chips [2]. the chinese ministry of commerce accuses the u.s. of overgeneralizing national security concerns and abusing export controls [2]. this, they argue, disrupts international trade and destabilizes global supply chains [2]. china is accelerating its domestic semiconductor development [7]. companies like huawei, alibaba, baidu, and tencent are developing their own ai chips [7]. huawei’s ascendas cloud is now commercially available and supports over 160 third-party large models, including deepseek [7].

korean chipmakers face collateral damage

The u.s.-china ai chip conflict is also impacting south korean chipmakers [6]. sk hynix and samsung electronics supply high bandwidth memory (hbm) for the h20 chips [6]. if h20 exports to china are halted, these korean companies will also suffer [6]. in 2024, nvidia exported approximately 1 million h20 units to china, with an estimated value between $12 billion and $15 billion [6]. each h20 chip contains six hbm units, primarily supplied by sk hynix and samsung electronics [6]. restrictions on h20 exports could affect the sale of around 8 million hbm units [6].

nvidia’s strategy shift

Nvidia is adapting to the evolving landscape by investing in domestic production [7]. the company is partnering with manufacturers to build ai supercomputers in the u.s. [7]. nvidia plans to invest $500 billion in ai infrastructure in the u.s. over the next four years [7]. this move could potentially ease regulatory concerns and secure necessary licenses [7]. however, it remains uncertain whether this investment will lead to a change in the u.s. government’s stance on export controls [7].

Bronnen

ai chips export control