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Yahoo
29-04-2025
- Business
- Yahoo
U.S. tariffs will hasten, not slow, China's drive for tech self-sufficiency
Donald Trump's 'Liberation Day' tariffs are shocking global markets and rekindling fears of a prolonged trade war. The U.S. president may be reconsidering some of his most disruptive tariffs as he floats the possibility of a deal—but he also continues to threaten new measures on goods like semiconductors and pharmaceuticals as he tries to shake up the global trading system. How will the tariffs affect China's tech sector which—even just a month ago—was riding high on the success of DeepSeek's AI model? China has been preparing since Trump first imposed tariffs back in 2018. Beijing has long anticipated a second round with the U.S. Faced with tighter restrictions on its access to advanced technology, China has methodically built out its technology supply chains. It's not just constructing local chip plants: Beijing's measures include bolstering renewable energy capacity, building out cloud computing capabilities through national projects like East Data West Compute, and investing in lidar technology and batteries. Beijing isn't trying to out-compete U.S. innovation in AI infrastructure. Instead, it's leveraging its manufacturing expertise and doubling down on physical AI, like robotics and AI-enabled EVs. China's chip industry still lags the cutting-edge. But it's far more self-sufficient today than it was five years ago, when the U.S. first started tightening the screws on chip exports. The country's strength goes beyond hardware, as DeepSeek's open-source AI models make affordable LLMs possible. The U.S. will likely continue to constrain China's tech sector, even if Trump pulls back on his tariffs threats. Measures like the chip export controls now enjoy bipartisan support in Washington. AI companies like Alibaba, ByteDance and DeepSeek previously relied heavily on the contentious Nvidia H20 chip, until recently the most cutting-edge processor that could be legally sold in China, were vital to. A full ban will force China's Big Tech companies to rethink their chip strategy—and maybe consider alternatives, like those made by Huawei. Analysts suggest Huawei's revenue will likely see a big jump in revenue as customers turn to its AI systems instead of Nvidia's. One recent report from SemiAnalysis suggests Huawei's latest product might even surpass Nvidia's in some configurations. Export controls, targeted tariffs and industrial policy may make sense for a U.S. worried about strategic competition and a need for more resilient supply chains. And that's why China has done the same. Since 2018, companies large and small have moved manufacturing and sourcing to countries like Vietnam, Bangladesh and Thailand. But companies can't cut out China completely. As Apple CEO Tim Cook noted in 2015, it's hard to match China's combination of scale, labor skill, and infrastructure, at least in the short term. More than 80% of iPhones are still made in China. Trump's punitive tariffs don't just raise costs for consumers. They'll force U.S. Big Tech to rethink supply chain strategies that have taken decades to build. Unpredictability, not tariffs, is the real tax for global firms that rely on long-term planning and stable conditions. Each policy tweak, whether its tariffs, export bans, blacklists or exemptions, ripples through global markets. For some Chinese firms, it's translating into a cautious and risk-averse 'wait-and-see' stance, pausing U.S. business and focusing on non-U.S. business for now. Chinese companies are already quietly hedging against trade disruption: building for the domestic market first, rethinking their expansion strategies, or rerouting development and sales to friendlier jurisdictions. Tariffs also affect China's AI plans, albeit indirectly. China's AI startups serve the broader tech sector; Executives rethinking AI plans will have a downstream effect on China's AI startup ecosystem. AI, cloud computing and semiconductors aren't isolated sectors. They're built on academic, commercial and governmental collaboration across borders. Technological progress still benefits from openness, whatever the value of strategic autonomy. Making matters worse is a rising tide of anti-Chinese sentiment around the world. The conflation of ethnicity, nationality, and geopolitics has become much more common since the COVID pandemic. Rising fears about China erodes a sense of trust and safety and damages the social fabric that underpins global innovation. And it can be self-defeating, as shown by the steady return of Chinese academics, worried about prejudice, back to China. The U.S. may hope that the right mix of tariffs, subsidies and export controls can preserve its tech leadership. But instead, the continued push to cut off China's access to advanced technology is going to make it more self-sufficient out of necessity. The trade war, even if it leads to a deal, will push China to invest in its tech sector even more. The next time the U.S. tries something like the H20 chip ban, it may mean very little to the China AI ecosystem. Competition can be healthy, but doesn't need to mean collapse. The challenge for both the U.S. and China is to draw clear guardrails to support national security without shutting down collaboration entirely. Climate tech, healthcare, AI safety and open-source development could still present real possibilities for cooperative leadership. The opinions expressed in commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune. This story was originally featured on
Yahoo
25-04-2025
- Business
- Yahoo
Chinese companies stockpiled billions of dollars worth of Nvidia H20 GPUs prior to recent ban
When you buy through links on our articles, Future and its syndication partners may earn a commission. China's top three internet companies reportedly stockpiled billions of dollars worth of Nvidia H20 GPUs before the U.S. export restrictions went into effect in April. Nikkei Asia reports that ByteDance, Alibaba, and Tencent anticipated the likelihood of an export ban on the China-specific H20 last year, and have since been snapping up as many H20 GPUs as they can get their hands three companies have reportedly accumulated around 1 million H20s — or about a full year's supply. While that is a significant number of GPUs, the companies' full supply was cut short by a month, as they requested that Nvidia ship them their fully-requested volume of H20s by the end of May. If all three companies managed to get their hands on all the H20s they requested, the total value would exceed $12 demand for computing power is apparently the main reason for the companies' stockpiling: Tencent's integration of DeepSeek into WeChat is a huge contributor to China's demand for computing Nvidia H20 will serve as a stop-gap solution for Chinese companies until homegrown AI GPUs are able to provide similar — or better — performance. Huawei is reportedly working on a new Ascend GPU claimed to rival the performance of Nvidia's GB200, which would give China the same AI computing capabilities as Western countries. Starting in April, the U.S government banned the exportation of Nvidia's H20 HGX AI GPU designed for the Chinese market. The government cited the GPU's memory and interconnect bandwidth, as well as its potential use in supercomputers, as reasons for the ban. The new restriction will force Nvidia to take a massive $5.5 billion financial hit, as it can no longer sell its existing inventory of H20 GPUs to H20 is a cut-down variant of the H100 — Nvidia's predecessor to the current HGX B200. Similar to the RTX 5090D and RTX 4090D, the H20 is a datacenter GPU tailor-made to comply with the U.S government's export sanctions to China, featuring dramatically reduced AI and HPC performance compared to its bigger brother.
Yahoo
16-04-2025
- Business
- Yahoo
Nvidia to Record $5.5B Charge as US Cracks Down on Chip Exports to China
Nvidia said it is set to take a $5.5 billion first-quarter charge after the U.S. limited exports of its artificial intelligence (AI) chips to China. The news, the latest salvo in an escalating trade war between Washington and Beijing, sent the firm's shares tumbling in premarket trading Wednesday. China's Ministry of Commerce also imposed export controls on AMD's sales of its AI chips (NVDA) said it expects to take a $5.5 billion charge in its fiscal 2026 first-quarter results after the U.S. limited exports of its artificial intelligence (AI) chips to China. The news, the latest salvo in an escalating trade war between Washington and Beijing, sent the firm's shares tumbling roughly 6% in premarket trading Wednesday. The company said in a regulatory filing late Tuesday that it was informed by the U.S. government on April 9 that it would be required to have an export license "for the indefinite future" to sell its H20 chips to China. Nvidia said the license requirement is aimed at addressing the risk that the chip would be "used in, or diverted to, a supercomputer in China." The chip is less powerful than its newer ones and tailored to meet existing export limits for the Chinese market. Nvidia's Q1 results, which are expected May 28, are set to include the $5.5 billion charge "associated with H20 products for inventory, purchase commitments, and related reserves," it said. According to Morningstar Research, "China has shrunk to about 10% of Nvidia's revenue from 20%, and we now expect it to go to close to zero." The New York Times reported that a spokesman for the U.S. Commerce Department said "that the administration was issuing new export licensing requirements for the Nvidia H20; a chip from Advanced Micro Devices, the MI308; and their equivalents." AMD (AMD) shares also were down about 6% in premarket trading. Read the original article on Investopedia Sign in to access your portfolio
