Less than a week away from earnings, Nvidia continues to face concerns over the fate of its H20 chip sales to China, with a fresh report indicating potentially more trouble.
Nvidia has told component suppliers to suspend work related to its H20 chip, according to multiple reports.
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Nvidia Corp (NASDAQ:NVDA, ETR:NVD) has instructed suppliers to pause production of its H20 artificial intelligence chip, a model developed specifically for the Chinese market, according to industry reports. The company told US-based Amkor Technology, which handles advanced packaging, and South Korea's Samsung Electronics, which provides high-bandwidth memory, to suspend work on the chip this week.
Shipping Nvidia's H20 chips to China was "great" for Beijing and Washington and not a security threat, the tech giant's chief said Friday.
Nvidia CEO Jensen Huang spoke to reporters during a visit to Taiwan. "I think TSMC is one of the greatest companies in the history of humanity, and anybody who wants to buy TSMC stock is a very smart person," he said.
According to the sources cited by the Information, Nvidia sent communications regarding a pause in H20-related production to Amkor Technology and Samsung Electronics. The directive comes weeks after the Chinese government reportedly told local tech companies to stop buying the chips due to alleged security concerns.
Nvidia has told some of its component suppliers to suspend production work related to H20, its AI chip tailor-made for the Chinese market, The Information reported on Thursday, citing two people with direct knowledge of the communications.
Markets move on gaps between reality and expectations. I expect the gap that could emerge after Nvidia reports second-quarter earnings next Wednesday will move markets more than whatever Federal Reserve Chair Jerome Powell says on Friday in Jackson Hole, Wyoming.
While not without competition, Nvidia (NASDAQ: NVDA) is still the king of the semiconductor industry. However, some recent market developments, in particular the company's obligation to pay the government a 15% share on some of its sales in China as part of the renewed shipping deal, have generated a lot of speculation regarding the short-term future of the stock.
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In of Nvidia Corp (NASDAQ:NVDA, ETR:NVD) highly anticipated earnings next week, there were reports that the company faces fresh pressure in China that could dent its eagerly awaited reopening of this key market. Following negotiations with the US government, the big news in the earnings would have been comments on the resumption of sales of its restricted H20 chip to China.