NVIDIA, AMD may soon start selling new AI chips in China to comply with US restrictions

NVIDIA and AMD plan to begin selling new, less powerful AI GPUs in China starting in July to comply with U.S. export restrictions. NVIDIA will offer a stripped-down AI GPU, code-named "B20," while AMD will target AI workloads with its Radeon AI PRO R9700. These moves follow NVIDIA incurring a $4.5 billion charge in Q1 and forecasting an $8 billion revenue hit in Q2 due to licensing requirements impacting H20 AI chip sales in China.

Analysis

U.S. export restrictions on advanced semiconductor technology to China are compelling chipmakers NVIDIA and AMD to adapt their product offerings for this significant market, with new, compliant AI GPUs slated for a July launch. NVIDIA is preparing a stripped-down AI GPU, codenamed "B20," potentially aligning with its reported new budget Blackwell-architecture chip priced between $6,500-$8,000, a notable discount from its $10,000-$12,000 H20 GPUs. This strategic shift follows substantial financial repercussions for NVIDIA, including a $4.5 billion charge in Q1 due to licensing requirements hindering H20 sales, an additional $2.5 billion in H20 chips it couldn't ship in Q1, and an anticipated $8 billion revenue impact in Q2. AMD is also targeting AI workloads in China with its new Radeon AI PRO R9700 workstation GPU. These moves highlight the chipmakers' efforts to mitigate the adverse effects of geopolitical trade policies, though the "stripped-down" nature of these chips suggests a compromise on performance and potentially revenue per unit, reflecting the challenging operating environment and contributing to the strongly negative sentiment associated with NVIDIA's near-term outlook in China.

Key Decisions for Investors

• Investors in NVIDIA should closely monitor the adoption and revenue contribution of the new, lower-priced "B20" AI GPU in China, given the substantial Q1 charge of $4.5 billion and a forecasted $8 billion Q2 revenue impact from existing U.S. export restrictions.
• AMD investors should evaluate the market penetration of its Radeon AI PRO R9700 in China, as this represents an attempt to capture AI workload demand under restrictive trade conditions, noting that AMD's sentiment signal (0.3) is less negative than NVIDIA's (-0.8) in this context.
• All investors in semiconductor stocks with China exposure should remain vigilant regarding evolving U.S. export controls, as these regulations directly impact revenue potential and necessitate strategic product adjustments, which these new chip launches exemplify.