Nvidia Chips Are Flowing to China Again -- What That Means for AI Adoption Trends

Yahoo

6 days ago

Key Points
The U.S. government just changed its rules to allow Nvidia to ship its H2O chips to China.
Most AI is still limited to large companies, and as Nvidia expands into new regions and clients, the technology will scale up and become more affordable.
As the support for AI infrastructure grows, Nvidia stands to gain in the long term.
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Nvidia (NASDAQ: NVDA) has had an almost unreal ascent over the past few years. It crossed the $1 trillion market cap threshold in 2023 and became the fifth-largest company in the world. And it has skipped over the front-runners in two years, increasing by 329%, to become the most valuable company in the world, as well as the first to reach $4 trillion in value.
The stock got a further boost this week when President Donald Trump relaxed the government's stance on selling Nvidia's chips to China. Let's see why this is important for Nvidia and what it means about artificial intelligence (AI) adoption trends globally.
Image source: Getty Images.
Nvidia, the U.S., and China
Nvidia is the premier graphics processing unit (GPU) company, making the most powerful chips for several industries. Before OpenAI changed the tech landscape with the launch of ChatGPT a few years ago, Nvidia was most known for its gaming chips. Today, its greatest growth and potential are in generative AI.
Nvidia is based in California, and as a U.S. company, it's subject to government rules and guidelines. Both the Biden administration and today's Trump administration have leveraged the U.S. lead in AI in its favor and attempted to curtail some of the country's best technology outside of the U.S., specifically in China.
The situation has changed several times, and from this past April until this week, the U.S. had implemented new restrictions on what chips Nvidia could export to China. In the short term, the company had to take a $4.5 billion charge on its fiscal first-quarter (ended April 27) financial statements related to its H2O chips for orders it couldn't fulfill in China.
CEO Jensen Huang has been outspoken in his disagreement with these policies and how he sees this working against the U.S. in the long term. Without Nvidia's products, he believes, Chinese tech companies will figure out how to build their own AI chips and models.
"General-purpose, open-source research and foundation models are the backbone of AI innovation," Huang said. "We believe that every civil model should run best on the U.S. technology stack, encouraging nations worldwide to choose America."