Recently, the tech circle has been stirred by a piece of news: The U.S. government has implemented 'indefinite' export controls on NVIDIA's H20 chip, which is specifically designed for China. NVIDIA CEO Jensen Huang's urgent visit to China raises questions about the underlying issues. What direction will Chinese tech companies take? Today, we will conduct an in-depth analysis of the complex situation behind this.

At the end of 2023, NVIDIA launched the H20 chip, which has only 15% of the performance of its flagship H100 chip and was specially designed to comply with U.S. export restrictions targeting the Chinese market. Nevertheless, in 2024, the sales of the H20 chip in China still reached $12 billion to $15 billion, with Chinese tech giants like ByteDance, Tencent, and Alibaba making large-scale purchases, reflecting the strong domestic demand for such chips.

However, by January 2025, things began to take a turn for the worse. U.S. lawmakers targeted the H20 chip, concerned that it would be used for AI research and development in China, threatening America's technological advantage, and proposed further restrictions on its export. On April 9, the U.S. government officially notified NVIDIA that H20 exports would require a license, and on April 14, it clarified that the restrictions would be 'indefinitely effective.' This policy directly put NVIDIA in a difficult position; on April 15, NVIDIA disclosed that due to H20 chip restrictions, the company would incur losses of up to $5.5 billion, involving aspects such as inventory, procurement commitments, and reserve costs. Following this news, NVIDIA's stock price plummeted after hours.

In such a critical moment, Jensen Huang made an urgent visit to China on April 16-17. On April 17, during talks in Beijing with the China Council for the Promotion of International Trade, he stated that U.S. export controls had significantly impacted NVIDIA's business, but emphasized that NVIDIA would continue to optimize its product system in compliance with regulatory requirements and continue to serve the Chinese market. That evening, when meeting with Jensen Huang, the Vice Premier also expressed that the investment and consumption potential of the Chinese market is enormous, welcoming U.S. companies like NVIDIA to deepen their engagement in China.

However, Jensen Huang's visit to China did not change the U.S. government's control over the H20 chip. As a result, NVIDIA's stock price plummeted 6.87% on April 16, with a market value evaporating by over 1.3 trillion yuan, and other chip stocks like AMD also fell in tandem, causing an uproar in the market.

However, this restriction by the U.S. has also accelerated the process of substituting domestic chips to a certain extent. The demand for domestic chips such as Huawei's Ascend 910C and Cambrian's MLUArch04 has surged. Taking Huawei as an example, its CloudMatrix 384 solution's performance has approached that of international competitors, demonstrating strong competitiveness. This means that Chinese tech companies are actively seeking paths of independent innovation in the face of external pressure, reducing reliance on foreign chips.

From a broader perspective, the U.S. government's actions not only harm the interests of companies like NVIDIA but also disrupt the normal order of the global chip supply chain. As a globally renowned chip manufacturer, NVIDIA has significant interests in the Chinese market, which is not only an important sales market but also a vital part of its global supply chain. Now, the U.S. government's restrictions have filled NVIDIA's development in the Chinese market with uncertainty.

For China, although it may face issues like chip shortages in the short term, in the long run, this is undoubtedly an opportunity to promote the development of the domestic chip industry. Chinese companies will invest more firmly in chip research and development, accelerating the realization of independently controllable chip technology.

The storm triggered by the H20 chip is far from over. How will NVIDIA develop in the Chinese market in the future? Can China's domestic chips seize the opportunity for leapfrog development? Let's wait and see.