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CNBC
21-07-2025
- Business
- CNBC
Nvidia's China return buys time for Beijing to boost its chip drive
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.
CNBC
11-07-2025
- Business
- CNBC
Trump's copper tariff supercharges U.S. prices — but experts are divided if there is an investment opportunity
U.S. President Donald Trump's 50% tariff on copper imports starting Aug. 1 has thrust the metal into the spotlight. U.S. Comex futures rose 2.65% on Thursday following the announcement and have continued to remain elevated, even as they pared earlier gains on Friday. The prices of copper in the U.S. surged 13% in its Wednesday session, which marked its best one-day gain since 1989 when Trump first announced the duties on copper imports. @HG.1 1Y mountain copper prices Meanwhile, the three-month benchmark copper futures on the London Metal Exchange were down over the last two days after the announcement, before recovering 0.73% to $9,700.50 per tonne as of 12:55 p.m. Singapore time Friday. The widening premium between the price of copper in the U.S. and the rest of the world comes as buyers stateside scrambled to front-load imports in anticipation of the tariffs, artificially inflating prices in the U.S. Nearly half of the copper used in the U.S. is imported, data from the U.S. Geological Survey showed. Analysts at Macquarie estimate that copper imports totaled 881 metric tons in the first half of the year, compared to an underlying requirement of around 441 metric tons, based on actual trade data for the January to May period and shipment data logs for June. "This implies a 440,000 tons excess inventory build, comprised of 107,000 tons in visible Comex stocks and 333,000 tons in unreported inventory and/or pull-forward of purchases through the industrial chain," they wrote in a Wednesday note. The U.S.' copper imports have rarely fallen below 36,000 tons a month, the analysts noted. The country has an underlying import demand of around 74,000 tons, implying that it has approximately nine months to "work down excess stocks," they added. Copper is a key input in products such as semiconductors, aircraft, data centers, lithium-ion batteries and electric vehicles. In a post on Truth Social on Wednesday, Trump noted that the metal is the "second most used material by the Department of Defense." The superpower's reliance on copper imports is a "vulnerability, but [the U.S. doesn't] have the capacity right now to offset imports," Carlos Miguel Gutierrez, the former U.S. Secretary of Commerce under President George W. Bush, told CNBC's "The China Connection" on Thursday. He expects some shortage of copper in the U.S. as well as an increase in prices as companies start investing in production capacity. Sabrin Chowdhury, head of commodities research at BMI, said that the U.S. would need at least 20 to 30 years to build significant copper production capacity. "It takes 10 years just to explore for copper," she said on Friday. Looking ahead, analysts at Citi Investment Research expect a pullback in the price of the metal outside the U.S. to $8,800 per ton within the next three months. Additionally, they foresee that the Comex-LME arbitrage — or the price differential in the price of copper in the U.S. and elsewhere — will be heavily discounted at a rate of 50% "given the significant U.S. inventory build in recent months and the likelihood that key copper exporters to the U.S. will be able to negotiate eventual partial exemptions at a lower tariff rate," they wrote in a Tuesday note. The volatility and price differential between copper in the U.S. and the rest of the world has raised the question of whether to invest in the metal right now. CNBC Pro spoke to two investment managers who have differing opinions. Significant volatility Alonso Munoz, chief investment officer and founding partner at the U.S.-headquartered Hamilton Capital Partners, says he is staying clear of the metal, at least in the short term. "We wouldn't be buyers of copper or copper stocks in the short run because there is potential for significant volatility," he said. "The price of copper spiked after Trump spoke about the tariffs to his cabinet, and that gives us some caution that if the administration changes their mind, that could instantly cause prices to retreat," Munoz noted. For now, he expects prices in the U.S. to stay elevated. While this will benefit U.S. producers through better margins, Munoz cautioned that it will ultimately result in higher prices of products containing copper. Such products include wiring and power delivery networks found in data centers and power grids, as well as motors in electric vehicles. In the long run, he expects prices to hover around $4.90 to $5 per ton, a 13% drop from current prices, amid strong demand for the metal from the green energy transition. "The short-term price spikes of 10-20% doesn't necessarily mean it would continue. If anything, we would be cautious that any change to the current geopolitical discussions on tariffs and even the supply and demand imbalance and price arbitrage with the rest of the world could actually cause U.S. copper prices to retreat significantly," Munoz explained. Undervalued asset Will McDonough, CEO of merchant bank Corestone Capital, holds a different view from Munoz. He considers copper an undervalued asset given its strong use cases. "People underappreciate the volume of copper necessary for intermittent battery supplies, like solar and wind, electric vehicles or even the adoption of artificial intelligence and data centers," he said. The investor, who is bullish on commodities, is investing in copper futures. He believes Trump's current focus on the metal is the result of a realization that "China and unfriendly foreign powers have hoarded a lot of copper supply." The jump in copper prices in the U.S., he added, is because the "market is aware that supply is concentrated." China produced 1,800 metric tons of copper in 2024, according to UN trade and development data. Meanwhile, the Asian giant was the top importer of copper ore and unrefined copper, accounting for roughly 60% of total imports in 2023, compared to just 17% in 2013, separate data from the trade agency showed. Even so, McDonough considers the current price a little high and attributes it to an "overreaction to the tariffs." While he expects a short-term correction in prices to "high fours or low fives," he said buying copper at the current $5 per pound range would still be considered "good value" in a few years from now.
CNBC
10-07-2025
- Business
- CNBC
U.S. reliance on copper imports is a 'vulnerability,' says former Commerce Sec. Carlos Gutierrez
Carlos Gutierrez, former Commerce Secretary, told CNBC's Emily Tan on 'The China Connection' that the U.S. reliance on copper imports is a 'vulnerability, but [the U.S. doesn't] have the capacity right now to offset imports.'
Business Mayor
21-05-2025
- Business
- Business Mayor
CNBC's The China Connection newsletter: A fragile truce as tempers flare
Containers pile up at Taicang Port Container Terminal in Suzhou City, Jiangsu Province, China, on May 18, 2025. Nurphoto | Nurphoto | Getty Images This report is from this week's CNBC's The China Connection newsletter, which brings you insights and analysis on what's driving the world's second-largest economy. Each week, we'll explore the biggest business stories in China, give a lowdown on market moves and help you set up for the week ahead. Like what you see? You can subscribe here. The big story Just a week after a breakthrough in U.S.-China trade tensions, neither side can yet be confident that the other is holding up their end of the bargain. 'These 90 days won't be smooth,' Liu Weidong, research fellow at a state-affiliated think tank, the Chinese Academy of Social Sciences' Institute of American Studies, told me this week. That's according to a CNBC translation of his Mandarin-language remarks. He predicts elevated uncertainty and smaller steps next, given the already-large breakthrough, as the U.S. and China each try to feel the other out towards a middle ground. The posturing has already begun. China's Ministry of Commerce on Wednesday warned that it would take legal action against those involved in assisting or implementing measures to curb the usage of advanced semiconductors from China. It follows an earlier accusation by the same ministry on Monday that blamed the U.S. for undermining trade talks with a Huawei chip warning last week — although the U.S. Bureau of Industry and Security had actually toned down its language and dismissed a more restrictive Biden-era plan on chips. Many in the U.S. are also concerned that China isn't relaxing rare earth export controls, another area in which China dominates the supply chain. That's despite the joint statement's vague description of how China would 'suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025.' Read More Aid Is Rushing Into Gaza While the Cease-Fire Holds 'I do think Washington was expecting the export controls on that group of rare earths to be lowered, permitting exports in a relatively unrestricted way,' said Scott Kennedy, senior adviser and trustee chair in Chinese Business and Economics at the Center for Strategic and International Studies in Washington, D.C. 'If it turns out that, in fact, that is not the result, the U.S. will probably conclude that China is in violation of the agreement,' he said. 'We could see a re-escalation sooner rather than later.' While the White House has yet to respond to a CNBC request for comment, a step back reveals ambiguity on China's side. But are the rare earth export controls part of China's countermeasures to U.S. tariffs? That's up for debate. An April 4 document from China's commerce ministry and customs agency announcing the export controls did not explicitly label them as such. While China did pause restrictions on 28 U.S. entities that were slapped with export controls on critical minerals, the ministry has made several public statements about strengthening export controls on critical minerals. 'Given the comprehensive and competitive nature of bilateral relations, the current truce — while focused on trade—can easily be undermined by export controls,' said Yue Su principal economist, China, at The Economist Intelligence Unit. 'While rhetorical posturing is unlikely to undermine the 90-day truce, China may well recalibrate its export control regime in a measured response to U.S. actions,' she said. The Chinese commerce ministry on Sunday also announced duties of up to 74.9% on imports of an engineering plastic from the U.S., Europe, Japan and Taiwan. Trump-Xi talk? U.S. President Donald Trump last week told Fox News he is open to a call with Chinese President Xi Jinping, or even a trip to China. But Beijing hasn't dropped any hints. 'I'd be surprised if the two step into the middle of these issues right now with so much unclear,' Kennedy said. The new U.S. Ambassador to China, David Perdue, arrived in Beijing on Thursday, slightly more than two weeks after being confirmed by the Senate. He was previously the head of Asia for U.S. packaged consumer goods company Sara Lee. One of Perdue's first social media posts called for 'strong actions' on fentanyl. He said on X that, together with U.S. Trade Representative Jamieson Greer, they were 'meaningfully engaged with the Chinese on next steps to stop this dangerous situation.' The U.S. has left in place 20% in tariffs imposed earlier this year over China's alleged role in the fentanyl crisis. The joint statement last week said the U.S. and China would establish a mechanism for talks about economic and trade relations, but neither side has specified when the next one would occur. Liu, who helped author a report in February with The Carter Center about bilateral cooperation, emphasized the overall focus of the current talks is trade rather than tech. He expects that China could eventually agree to buy more U.S. agriculture and energy products — given the perception that pressuring farmers can influence Trump. Top TV picks on CNBC Qualcomm CEO Cristiano Amon on tariffs and China Cristiano Amon, CEO of Qualcomm, discusses tariffs and the China market for his business. Toyota North America COO on new fleet of cars and tariffs on auto imports Mark Templin, Toyota North America COO, joins CNBC's 'Closing Bell' to discuss the company's launch of their new products, the company's pricing, and much more. Walter Isaacson on biotech breakthroughs vs. federal funding cuts, Trump-U.S. business relationship Walter Isaacson, 'Elon Musk' author, Perella Weinberg Partners advisory partner and Tulane professor, joins 'Squawk Box' to discuss breakthroughs in gene editing and biotech to cure diseases, impact of federal funding cuts, the White House relationship with the business world, and more. Need to know In the markets Stock chart icon The performance of the Shanghai Composite over the past year. Chinese and Hong Kong stocks climbed Wednesday. Mainland China's CSI 300 was up 0.68% while Hong Kong's Hang Seng Index — which includes major Chinese companies — rose 0.53% as of 12 p.m. local time. The benchmark 10-year Chinese government bond yield is at 1.669%. Coming up May 22: Xiaomi to release mobile phone chip, its first SUV and other products May 27: China to report industrial profits for April
Business Mayor
20-05-2025
- Automotive
- Business Mayor
Shares in China's CATL jump over 18% in Hong Kong debut as battery maker rides EV boom
Shares of CATL debut in Hong Kong on May 20, 2025. Sopa Images | Lightrocket | Getty Images Shares of the world's largest battery manufacturer Contemporary Amperex Technology rose over 18% in their Hong Kong trading debut on Tuesday, as investors bet on the company's ability to ride the boom in electronic vehicles. Shares were last trading at 308 Hong Kong dollars apiece on the Hong Kong stock exchange, compared with the initial public offering price of HK$263 dollars per share. CATL IPO raised HK$35.7 billion ($4.6 billion) according to a company filing, reportedly making it the largest global listing in 2025. CATL shares, which had opened lower on mainland China's Shenzhen stock exchange, reversed course to rise 1.5% to 264 Chinese yuan. 'I think that as the H [Hong Kong] shares continue to perform strongly, that will pull up the A [mainland China] shares,' Neil Beveridge, senior research analyst at Bernstein, told CNBC's 'The China Connection.' 'For the H shares to be trading above the A shares just shows how exceptional the demand is for this company, particularly from global investors,' he added. CATL said in its Hong Kong filing that 90% of the funds raised will go toward building its upcoming factory in Hungary, aimed at supplying batteries to European automotive clients including Stellantis , BMW and Volkswagen . 'Europe is an exceptionally important market for CATL,' said Beveridge, adding that the company's growth in China was going to slow over the coming years due to already high sales penetration. 'Europe's only at about 20-25% [sales] penetration, so there's still a lot of growth there to come,' he added. The company's push into Europe coincided with global expansions from leading Chinese EV makers such as BYD. These efforts also come amid increased scrutiny from the U.S. and EU, which placed punitive tariffs on EVs made in China last year, citing unfair trade practices. CATL found itself in the crosshairs of U.S.-China trade earlier this year, with the Pentagon putting it on a watchlist in January over suspected links to China's military — allegations the company has rejected. According to Bill Russo, founder and CEO of investment advisory firm Automobility, the watchlist designation, coupled with Trump's latest tariffs on China, may complicate the company's U.S.-related business. However, the impact on its global ambitions will likely be limited unless broader multilateral restrictions follow, as CATL's core strategy remains focused on markets such as Europe and emerging regions, he said. Weekly analysis and insights from Asia's largest economy in your inbox Subscribe now In March, CATL posted a 9.7% drop in its 2024 annual revenue, hit by intense competition in China's electric-vehicle market that pressured the world's top battery producer. Still, the company's net profit went up by 15% year over year. Demand for electric vehicles in China, a critical market for CATL, gained momentum last year on the back of a combination of subsidies and consumer purchase incentives. EV sales in China surged to 11 million in 2024 — a 40% increase compared to the previous year, data from U.K. research firm Rho Motion showed. 'We're a big believer and investor in CATL in our global EV strategy. It's just phenomenal, it's a 'must own company,' in my opinion, along with BYD for investors in the space,' said Brendan Ahern, chief investment officer at KraneShares. Bank of America, China International Capital Corporation, Goldman Sachs, Morgan Stanely, JPMorgan Chase were the joint lead mangers for the Hong Kong offering. Speaking on CNBC's Squawk Box Asia on Tuesday, Andy Maynard, managing director and head of equities at China Renaissance, said that the CATL's IPO shows that investors still look to China to find quality plays despite recent trade tensions between Beijing and Washington. Correction: This story was revised to accurately reflect the jump in shares at market open.
