NVIDIA’s Huge China Win, But Tariff Could Ruin It

By Douglas A. McIntyre Published Mar 18, 11:54AM EDT

Quick Read

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NVIDIA’s Huge China Win, But Tariff Could Ruin It — © lunopark / Shutterstock.com

NVIDIA (NASDAQ: NVDA | NVDA Price Prediction) was allowed to sell its “second-best” H20 AI chip in China. Then it was, and then it wasn’t. Now it is. However, it may have to pay a 25% tariff to the US government, which dampens the celebration.

Almost a year ago, the Commerce Department blocked the H20 sales to China. At the same time, China told its tech companies to buy chips made in China. However, there were doubts that those created and made in China did not match Nvidia’s chips.

All the while, Chinese companies were gaining access to Nvidia’s chips through locations such as Singapore. The Association of Certified Sanctions Specialists, LLC reported, “However, recent investigations and parliamentary discussions have revealed a troubling trend: traders in Singapore may be acting as intermediaries, purchasing Nvidia chips under legitimate pretenses and then rerouting them to Chinese entities through third-party distributors, shell companies, and reexport hubs.” The issue was first raised last March. It also appeared that the Nvidia chips were available in data centers in Malaysia and Indonesia.

Early this year, Nvidia CEO Jensen Huang did (or did not say) that the road to China had been blocked again. Yesterday, he said the door was wide open. Huang said to attendees at an Nvidia event, “We’ve been licensed for many customers in China. We’ve received purchase orders from many customers, and we’re in the process of restarting our manufacturing.” Depending on whose guess people believe, China’s sales could be worth billions or tens of billions of dollars

But, how much will the US government skim off the top of this revenue? Earlier this year, the White House issued an edict. “The President also imposed a 25% tariff on certain advanced computing chips, such as the NVIDIA H200 and AMD MI325X.” President Trump posted on Truth Social, “I have informed President Xi of China that the United States will allow NVIDIA to ship its H200 products to approved customers in China and other Countries under conditions that allow for continued strong National Security. President Xi responded positively! $25% will be paid to the United States of America.” Will the president enforce that or not?

Selling chips and getting the full price is one thing. Giving to the US government 25% is another. NVIDIA has not said whether the problem is real. If so, the new deal is not as good as it seems.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.