logo
Nvidia's China return buys time for Beijing to boost its chip drive

Nvidia's China return buys time for Beijing to boost its chip drive

CNBC4 days ago
As semiconductors have become a geopolitical hot potato over the past few years, it's no surprise that Nvidia , the leader in artificial intelligence-related chips, has been caught up in escalating tensions between the U.S. and China. When Nvidia returned to the China market last week , seemingly with the blessing of Washington, it sparked debate over the strategic implications for the U.S.' dominance in AI and China's own focus on boosting its domestic chip and tech industry. For the U.S., Nvidia's return could help cement American strength in AI globally, experts told CNBC. For China, it could buy the country time as it continues on its own path to build Nvidia rivals and keep pace with AI software development. It's a tricky relationship, underscoring the strategic importance of the graphics processing units (GPUs) that Nvidia designs and that currently underpin the world's AI. "The relationship is symbiotic but I do believe China needs the U.S. technology more at this moment in time," Daniel Newman, CEO of Futurum, told CNBC's "The China Connection" last week. Nvidia's warnings Earlier this year, the U.S. government restricted exports of Nvidia's H20 chip to China. The product, a less-advanced version of Nvidia's leading hardware, had been created to comply with previous U.S. export restrictions. Washington has expressed concerned that these chips could be used in areas such as advancing the Chinese military and China's own AI industry. Nvidia took a $4.5 billion writedown on the unsold inventory and warned the China restrictions could impact billions of dollars of potential sales. Jensen Huang, the CEO of Nvidia, has been critical of export curbs . He has said it would be a "tremendous loss" for Nvidia not to participate in China and that rival Huawei would be able to fulfil the needs of the country in its absence. Huang has argued that the restrictions could boost China's domestic semiconductor industry and that it risks eroding America's technological edge. That message appears to have got through to the White House. Nvidia said last week that it received backing from the U.S. government to resume sales of H20 in China. How the move will benefit the U.S. From a business perspective, Nvidia is expected to gain. But for Washington, the move is more strategic. "We want to keep having the Chinese use the American technology stack, because they still rely upon it," Commerce Secretary Howard Lutnick told CNBC last week. Nvidia has managed to gain a formidable position in the market for semiconductors required to train and run AI applications, not just because of its hardware but also because of the popularity of its software platform known as CUDA, that developers build on. This creates an "ecosystem" around Nvidia's products which has proven sticky for its users. The return of the H20 to the world's second-largest economy will "buy China time" to boost its domestic industry, according to Pranay Kotasthane, deputy director at the Takshashila Institution. "But it will also buy the U.S. companies some respite. China is Nvidia's largest market and is home to 50 per cent of AI developers according to Jensen Huang. If that path is completely closed, American firms like Nvidia will find it difficult to raise revenues and re-invest them in the next round of research and development," Kotasthane said. "It might be justifiable to restrain access to the most advanced chips but to expand the scope of the restrictions doesn't make strategic sense." China domestic chips in focus Huawei has been China's leading player in developing AI-focused chips. The country's technology companies are using some of Huawei's hardware but the firm has yet to overtake the dominance of Nvidia's latest chips. One possible outcome is that U.S. export curbs will accelerate China's domestic efforts. China has been looking to boost its domestic semiconductor industry with a particular focus on AI chips. There are a whole host of startups working on new products in the country. Nvidia's return to China could slowdown that progress. "If Nvidia's chips are made available to Chinese firms, it could weaken momentum behind domestic chip projects, cut off capital, and delay progress in domestic Chinese hardware. This retains U.S. tech influence over global AI rails," Tejas Dessai, director of research at Global X ETFs, told CNBC by email. Ultimately, it all goes back to Nvidia's software which keeps developers locked into its hardware. "Chinese model developers still prefer to use Nvidia hardware, because the domestic alternative AI stack, particularly the software development environment from Huawei is still difficult to use and lacks the depth and flexibility of Nvidia's offering," Paul Triolo, a partner at DGA-Albright Stonebridge Group, told CNBC by email. Can China catch up to Nvidia? Still, China's direction of travel and its quest for domestic providers of AI chips is unlikely to change. "Eventually Chinese AI model developers will have to transitions to a domestic AI stack," Triolo said. Nvidia's chips have proved very effective at training huge AI models that require massive amounts of data to be processed. The actual running of those AI model in products like chatbots is known as inferencing. This process may require a different type of chip, which Chinese tech giants as well as startups are working on. "In chips, China's opportunity could come when the focus shifts to inference. That's when demand for lower cost, efficient processors could scale, and we believe custom chip programs from big Chinese tech companies could ultimately serve that demand," Dessai of Global X ETFs said.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

S&P 500 and Nasdaq 100 Post Record Highs on Earnings Optimism
S&P 500 and Nasdaq 100 Post Record Highs on Earnings Optimism

Yahoo

time13 minutes ago

  • Yahoo

S&P 500 and Nasdaq 100 Post Record Highs on Earnings Optimism

The S&P 500 Index ($SPX) (SPY) Friday closed up +0.40%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.47%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.23%. September E-mini S&P futures (ESU25) rose +0.38%, and September E-mini Nasdaq futures (NQU25) rose +0.26%. Stock indexes settled higher on Friday, with the S&P 500 and Nasdaq 100 posting new all-time highs. Signs of economic resilience and better-than-expected quarterly earnings results are underpinning stocks, with the S&P 500 and Nasdaq 100 posting new record highs this week. According to data compiled by Bloomberg Intelligence, around 83% of S&P 500 companies that have reported Q2 earnings have exceeded analysts' profit estimates. More News from Barchart This Self-Driving Car Stock Is Surging on a Major Nvidia Boost UnitedHealth Stock Spirals Lower Again. Don't Buy the Dip. UNH Stock Falls as UnitedHealth Confirms DOJ Probe. How Should You Play Shares Here? Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! Stocks added to their gains on Friday afternoon when bond yields fell from early highs and moved lower. The 10-year T-note yield finished Friday down by -1 bp to 4.38%. On the negative side, Intel closed down more than 8% to limit gains in chip stocks after reporting an unexpected Q2 loss of -10 cents a share, which was weaker than the expected 1-cent profit, and announced plans to reduce capital expenditures and cut staff by 15% by the end of the year. Also, Charter Communications closed down more than -18% after reporting Q2 EPS below consensus. Friday's US economic news was negative for stocks after Jun capital goods new orders nondefense ex-aircraft & parts unexpectedly fell -0.7% m/m, weaker than expectations of a +0.1% m/m increase. The markets are awaiting President Trump's August 1 deadline for trade deals to avoid high tariffs. Last Wednesday, Mr. Trump announced that he intends to send a tariff letter to more than 150 countries, notifying them that their tariff rates could be 10% or 15%, effective August 1. As an update, Mr. Trump late Wednesday said, 'We'll have a straight, simple tariff of anywhere between 15% and 50%,' an indication that the floor for tariffs is rising and suggesting that he would not go below 15%. Federal funds futures prices are discounting the chances for a -25 bp rate cut at 3% at the July 29-30 FOMC meeting and 66% at the following meeting on September 16-17. The markets this week absorbed a heavy slate of quarterly corporate earnings, with reports from about one-fifth of the companies in the S&P 500. Early results now show S&P 500 earnings are on track to rise +4.5% for the second quarter, better than the pre-season expectations of +2.8% y/y, according to Bloomberg Intelligence. Around 83% of the S&P 500 companies that have reported have exceeded profit estimates. Overseas stock markets on Friday settled lower. The Euro Stoxx 50 closed down -0.06%. China's Shanghai Composite closed down -0.33%. Japan's Nikkei Stock 225 closed down -0.88%. Interest Rates September 10-year T-notes (ZNU25) Friday closed up by +5 ticks. The 10-year T-note yield fell by -1.2 bp to 4.384%. T-notes recovered from early losses on Friday and moved higher after a -1% fall in crude oil prices prompted short covering in T-notes. Also, T-notes rose after comments from President Trump eased fears that he would fire the Fed Chair when he said there was 'no tension' with Powell. T-notes on Friday initially moved lower due to negative carryover from a slide in 10-year German bunds to a 3.75-month low. Also, upcoming supply pressures are weighing on T-notes as the Treasury will auction $69 billion of 2-year T-notes and $70 billion of 5-year T-notes on Monday. European government bond yields today are moving higher. The 10-year German bund yield rose to a 3.75-month high of 2.769% and finished up +1.6 bp to 2.718%. The 10-year UK gilt yield rose +1.4 bp to 4.635%. Eurozone Jun M3 money supply rose +.3% y/y, weaker than expectations of +3.7% y/y and the slowest pace of increase in 9 months. The German Jul IFO business confidence index rose +0.2 to a 14-month high of 88.6, although weaker than expectations of 89.0. UK Jun retail sales ex-auto fuel rose +0.6% m/m, weaker than expectations of +1.2% m/m. ECB Governing Council member Kazaks said he saw little reason to lower interest rates further unless the economy suffers a major blow, and 'There is value in the ECB holding interest rates at current levels, and the time of no-brainer moves to hike or cut rates is over.' ECB Governing Council member and Bundesbank President Nagel stated that a steady monetary policy from the ECB is appropriate, as the inflation outlook has remained unchanged and the economic outlook has improved slightly. Swaps are discounting the chances at 18% for a -25 bp rate cut by the ECB at the September 11 policy meeting. US Stock Movers Centene (CNC) closed up more than +6% to lead managed health care providers higher after laying out a plan to address problems in its Affordable Care Act business to ensure it turns a profit in 2026. Also, Molina Healthcare (MOH) closed up more than +4%, and Humana (HUM), Elevance Health (ELV), and CVS Health (CVS) closed up more than +3%. In addition, UnitedHealth Group (UNH) closed up +0.89%. Deckers Outdoor Corp (DECK) closed up more than +11% to lead gainers in the S&P 500 after reporting Q1 net sales of $964.5 million, well above the consensus of $901.4 million. Comfort Systems USA (FIX) closed up more than +23% after reporting Q2 revenue of $2.17 billion, stronger than the consensus of $1.96 billion. Newmont Corp (NEM) closed up more than +6% after reporting Q2 sales of $5.32 billion, better than the consensus of $4.85 billion. Edwards Lifesciences (EW) closed up more than +5% after reporting Q2 sales of $1.53 billion, better than the consensus of $1.50 billion, and raising its full-year sales forecast to $5.9 billion-$6.1 billion from a previous estimate of $5.7 billion-$6.10 billion, stronger than the consensus of $5.91 billion. Aon Plc (AON) closed up more than +4% after reporting Q2 adjusted EPS of $3.49, above the consensus of $3.40. Palantir Technologies (PLTR) closed up more than +2% after Piper Sandler initiated coverage on the stock with a recommendation of overweight and a price target of $170. Gilead Sciences (GILD) closed up more than +2% after Needham upgraded the stock to buy from hold with a price target of $133. Carvana (CVNA) closed up more than +2% after Oppenheimer upgraded the stock to outperform from market perform with a price target of $450. Intel (INTC) closed down more than -8% to limit gains in chip stocks after reporting an unexpected Q2 loss of -10 cents a share, weaker than expectations of a +1 cent profit, and said it will reduce capital expenditures and cut staff by 15% by the end of the year. Also, ASML Holding NV (ASML) and Applied Materials (AMAT) closed down more than -1%. Crypto-linked stocks were under pressure Friday after the price of Bitcoin (^BTCUSD) fell more than -1% to a 2-week low. As a result, Galaxy Digital (GLXY) closed down more than -3%. Also, MicroStrategy (MSTR), Riot Platforms (RIOT), and Coinbase Global (COIN) closed down more than -1%. Charter Communications (CHTR) closed down more than -18% to lead losers in the S&P 500 after reporting Q2 EPS of $9.18, well below the consensus of $9.82. Comcast Corp (CMCSA) also closed down more than -4% on the news. Healthpeak Properties (DOC) closed down more than -6% after reporting Q2 lab same-store NOI growth of 1.5%, below the consensus of 2.45%. Sarepta Therapeutics (SRPT) closed down more than -6% after an evaluation committee of the European Medicines Agency recommended against the approval of the company's gene therapy Elevidys. Henry Schein Inc. (HSIC) closed down more than -1% after Stifel downgraded the stock to neutral from buy. Earnings Reports (7/28/2025) Amkor Technology Inc (AMKR), Brixmor Property Group Inc (BRX), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), Cincinnati Financial Corp (CINF), Crane Co (CR), Exelixis Inc (EXEL), Hartford Insurance Group Inc/The (HIG), Kilroy Realty Corp (KRC), NOV Inc (NOV), Nucor Corp (NUE), Olin Corp (OLN), Principal Financial Group Inc (PFG), Revvity Inc (RVTY), Rithm Capital Corp (RITM), Simpson Manufacturing Co Inc (SSD), Universal Health Services Inc (UHS), Veralto Corp (VLTO), Waste Management Inc (WM), Welltower Inc (WELL), Western Union Co/The (WU), Whirlpool Corp (WHR), Woodward Inc (WWD). On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

US appeals court strikes down SEC rule on 'audit trail' funding
US appeals court strikes down SEC rule on 'audit trail' funding

Yahoo

time13 minutes ago

  • Yahoo

US appeals court strikes down SEC rule on 'audit trail' funding

WASHINGTON (Reuters) -A federal appeals court on Friday struck down 2023 regulations adopted by the U.S. Securities and Exchange Commission on funding a comprehensive market surveillance system, finding that Wall Street's top regulator had not provided a sufficient basis for allowing stock exchanges to pass on its costs to their members, court papers showed. The unanimous decision represented another blow to SEC regulations adopted under the previous Biden administration, which faced concerted opposition from industry and Republican lawmakers. It was also a setback for the Consolidated Audit Trail, a repository of investor and transaction data meant to give regulators overarching visibility into U.S. market operations, but which has faced delays and obstacles for more than a decade. The American Securities Association and Citadel Securities, which brought the lawsuit, both hailed the outcome. The ruling "prevents a tax hike on every American investor who buys or sells a share of stock," ASA President Chris Iacovella said in a statement. The SEC did not immediately respond to requests for comment. Over the objections of its Republican members, the SEC in 2023 split the operating costs among buyers, sellers, and exchanges. Officials said at the time this would divide costs evenly but also allow exchanges several years to recoup hundreds of millions already spent. This drew stiff objections from the investment industry, which said it could be left paying an unfairly large share. The two Republicans are now part of the five-member commission's controlling majority. In an opinion for a three-judge panel of the U.S. Court of Appeals for 11th Circuit, Circuit Judge Andrew Brasher said that, because the SEC had not advanced a sufficient justification in deciding how the system's cost would fall on different actors in the marketplace, "we conclude that the 2023 Funding Order is arbitrary and capricious" and therefore in violation of federal laws governing the crafting of regulations. The appeals court sent the rule back to the SEC for further processing in line with the court's decision. The SEC mandated the CAT's creation in 2012 as a response to the "flash crash" of 2010 when major Wall Street indexes temporarily erased nearly $1 trillion in market value in a matter of minutes. Officials say it can allow regulators to spot market manipulation and have cited its data in enforcement actions.

401(k): What the Average Person in Their 30s Has Saved
401(k): What the Average Person in Their 30s Has Saved

Yahoo

time13 minutes ago

  • Yahoo

401(k): What the Average Person in Their 30s Has Saved

With financial literacy growing at an exponential rate, people aren't waiting to start thinking about their retirement. Without the security of a company-sponsored pension, most Americans contribute to things like a 401(k) to ensure they have enough funds to live off once they quit their 9-to-5. Read More: Learn More: According to a survey conducted by Northwestern Mutual, Americans believe they will need approximately $1.26 million to retire comfortably. Unfortunately, their savings may not be enough to cover this bold number. Here is how much the average person in their 30s has saved and what you can do to help boost your retirement funds if you are falling short of your goal. Average 401(k) for People in Their 30s Recent data from Fidelity shows that the average 401(k) savings for people ages 30 to 34 was $44,800 at the end of the first quarter of 2025, CNBC reported. The average 401(k) balance for individuals aged 35 to 39 was $71,400 during the same period. The data was based on Fidelity's quarterly analysis of over 50 million retirement accounts. Check Out: How This Year's 401(k) Balances Compare With 2024's Overall, market volatility at the beginning of the year left some balances short of their 2024 levels. According to data provided by Fidelity, 401(k) balances for individuals in their 30s decreased by approximately 2% in the first quarter. The good news, as highlighted by the investment company, is that savings rates remained consistent. How Much Should Someone in Their 30s Have Saved? Fidelity suggests that a person should have one year's salary saved by the time they are 30. By age 40, the global financial services company advises that a person should have three times their annual salary saved. Current 401(k) account balances indicate that individuals in their 30s may be significantly short of these recommendations. However, many savvy investors have other retirement accounts, such as IRAs or Roth IRAs, that may better align their savings with expert suggestions. What To Do To Boost Retirement Savings Millennials were skeptical whether they had saved enough, according to Northwestern Mutual's 2025 Planning & Progress Study, with 57% saying they were somewhat likely or very likely to outlive their savings. Fortunately, there are several options available to 30-year-olds hoping to boost retirement savings. The financial experts at Charles Schwab recommend that individuals in their 30s and 40s strive to cut back where possible, particularly in the face of competing interests. While many millennials are well into their careers, they are also paying back student loans and raising families. Retirement savings may be on the back burner, but they should not be out of the picture. Putting more money into investment accounts, even small amounts, can help boost retirement savings exponentially, especially during this critical decade. As income increases, the experts at Charles Schwab encourage individuals in their 30s and 40s to refrain from excessive spending and instead focus on investing. They recommend funding savings first and contributing to a tax-advantaged IRA if they have maxed out their 401(k) contributions. Finally, the financial services company also said individuals should avoid borrowing from their 401(k). Even if the amount is paid back with interest, it would not compensate for the growth that could have occurred. More From GOBankingRates 10 Cars That Outlast the Average Vehicle This article originally appeared on 401(k): What the Average Person in Their 30s Has Saved Sign in to access your portfolio

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store