NVIDIA has received a high dose of negative news last week last week: $ 4.5 billion -worth of chips initially dedicated to customers, which will eventually be not included.
The company has developed the so -called H20 chips that are less powerful than the highest semiconductors to follow the Biden Administration’s rules against shipping technologies for foreign opponents that could help their PG efforts. However, Trump’s administration took a step further in early April and banned even the second pillar chips export.
“We are taking a few billion dollars that need to be written off in stocks that cannot be sold or redistributed,” said Jensen Huang, CEO of NVIDIA on May 28. In the income call.
Detailed information about the decision to write the value of chips to zero – rather than selling them to other customers – did not explain. The company added that, without avoiding that it was “explored by limited options” for an unused inventory, a step that would apparently disagree with the sales of the chips.
The H20 was built specifically for the Chinese market according to the old export rules. The design and limited capabilities of the chip can be difficult to use in other countries. “It’s really anywhere else, without much precious change,” says Arash Azadegan, a professor of control of the Rutgers Business School.
This change may include additional NVIDIA costs. In addition, some chips may “not meet customers ‘activities in other regions” or may be created “characteristic of Chinese clients’ requests or demands,” says Chado Autry, a professor at the University of Tennessee’s University.
Even if she could sell chips by reducing their price, NVIDIA will risk damaging its image as a top -level innovation. The company’s new Blackwell GPU, after all, Power, the most modern AI, as the Openai is still the future GPT-5 model. “NVIDIA probably doesn’t want to flood the market with discounts – it can mislead their pricing, confuse customers and distract from a great deal of effort to the newer Blackwell series,” says Azategan, based on Blackwell’s new products from Amazon’s AWS, Microsoft Azure, Google Cloud and Oracle.
NVIDIA refused to comment on what its executives said last week during the company’s revenue.
After Deepseek, based in January, has released its ChatgPt competitor, Great Chinese firms such as Alibaba, Bytedance and Tencent have purchased NVIDIA H20 chips, Reuters said in February. These companies probably created powerful AI opportunities by using the H20 chips, so there is no reason to believe that US companies could not do the same if NVIDIA sold H20.
But NVIDIA and US -based customers are probably not interested in it, says Matthew Bryson, CEO of Wedbush Securies, covering NVIDIA. “The reason these products go to China is that everyone will choose something better.” Bryson explains that the H20, which is based on the H20, “would never have been done” if it is not deliberately designed to prevent Chinese companies from developing models similar to US -made AIs. And if NVIDIA has sold chips with a great discount to reflect their US market value, it could “canal” better products, he says.
Initially, NVIDIA had to write down $ 5.5 billion of chips from its balance sheet. But it was able to save about $ 1 billion H20 stock. ”[reusing] Certain materials, ”said Colette Ker, a last week’s income call, to reduce the release of the first quarter of the first quarter.
It is not surprising that she noted that the NVIDIA’s new rules of export of Trump’s administration will take revenue from Trump’s Chinese insurance in the first half of the year. The company commissioned $ 2.5 billion in revenue in the first quarter and provided that the second second revenue loss was $ 8 billion.
The question remains what happens to this H20 stock. Supply chain experts interviewed Fate It is suspected to be thrown away. “These chips will meet with a cool lava lamp, which you received from aunt somewhere in a landfill,” wrote Alan Amanling, Professor of the Hasm Business College of Tennessee University Fate E -mail By mail. “With many other growth opportunities and opportunities associated with the cost of repeating these chips, re -repeated and requirement, it was obviously too high.”
Because of how the new export rules that have come into effect quickly came into force, the H20 chips are likely to sit in friendly places such as Taiwan and Hong Kong, said the University of Tennessee’s Author. Taiwan -based TSMC produces a lot of NVIDIA stocks for China -based customers, while NVIDIA execution partners are located in nearby countries.
The write -off of the H20 chips had a minimum short -term effect on NVIDIA other prosperous business. NVIDIA reported that the first quarter’s revenue was $ 44.1 billion (69% more than a year) and $ 18.8 billion with net income, a healthy 42.6% net profit margin.
The entire write -off of chips provides direct tax relief by reducing the taxable income of the company. Given NVIDIA’s future sales prospects and costs, this benefit may be greater than financial benefits when chips are selling at a high discount.
“NVIDIA will be fine; NVIDIA investors will be fine,” says Rutgers Azadegan. “True story,” he said that NVIDIA production partners, such as TSMC and suppliers, including Samsung and Micron, would be most affected by H20 stocks because they created business by performing critical features in the NVIDIA supply chain. The extent of the impact on these partners will be determined in the coming months and years, Azategan notes. “It’s never on the penny we can turn.”
NVIDIA analyst Harsh Kumar from Piper Sandler expects the short to finally eliminate the H20 token block to China. If so, NVIDIA could finally fill in H20 sales or deliver tokens to new Chinese customers, assuming the company to enter the H20 inventory. It is unclear how real this scenario is after Trump’s administration provided a block named by the judge at its “liberation day” rates.
However, Trump’s new export insurance prevents NVIDIA to deliver tokens to China for national security reasons, so it may have little correlation with its tariff agenda. “To me, it almost meant there was a way to which Jensen [Huang] And Nvidia sees that this H20 chip will be sold back to China, ”said Kumar FatePossibly to help in the future output companies already flying high -flying shares to larger heights.
This story was initially displayed by fortuna.com
