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According to a report citing investment bank Jefferies, NVIDIA’s H20 GPUs have been banned in China. These chips had previously been at the center of US trade tensions with China after the Trump administration granted licenses for their sale. Multiple reports surfaced about Chinese discomfort with using these GPUs due to their US origin. However, an investment note from Jefferies shared on social media suggests that H20 GPUs have been completely banned in China, preventing Chinese firms from ordering them from NVIDIA.
China Bans Procurement of “Downgraded” US Chips Says Reported Investment Note
Jefferies’ note claims that Chinese authorities have banned the sale of NVIDIA’s H20 AI GPUs in the country. This follows recent reports indicating that NVIDIA has asked some supply chain partners to halt H20 production. Jefferies also notes that media reports suggest these GPUs can no longer be sold in China.
However, the bank adds that “industry checks indicate China has officially banned the procurement of H20 and other ‘downgraded US AI chips’ until further notice.” As a result, Chinese entities are now forbidden from buying NVIDIA’s GPUs. This appears to be a step up from earlier reports suggesting that the Chinese government had merely required state-linked computing clusters to use at least 50% domestic AI chips.
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Jefferies notes that “no Chinese companies will place orders with NVDA.” The bank also states that its channel checks in Taiwan have yielded similar results. “Our industry checks in Taiwan also indicate NVDA has suspended all packaging and server production work related to H20, ‘until further notice,’ says the bank.” As a result, Jefferies concludes that NVIDIA will be unable to generate any AI chip revenue from China until the US and China reach an agreement on trade.
If these reports are accurate, NVIDIA could face additional challenges in China just as it prepares to report its earnings. The company’s shares are flat in premarket trading and have lost 1.5% over the past five trading days. Since NVIDIA is in a quiet period ahead of its earnings, it cannot comment on news, creating an opportunity for short sellers to target the stock.
