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AI GPU giant NVIDIA’s H20 chips have been banned in China, suggests a report which quotes investment bank Jefferies. NVIDIA’s H20 GPUs have been at the center of US trade tensions with China, after the Trump administration granted the firm licenses to sell them, multiple reports surfaced about Chinese discomfort with using the GPUs due to their US origin. However, one snippet of an investment note purportedly from Jefferies shared on social media claims that the H20 GPUs have been completely banned in China, which prevents Chinese firms from placing orders with NVIDIA.
China Bans Procurement Of “Downgraded” US Chips Says Reported Investment Note
In a note purportedly belonging to Jefferies and shared on X, the investment bank outlines that Chinese authorities have completely banned NVIDIA H20 AI GPU sales in the country. The note follows several recent reports that have claimed that NVIDIA has asked some supply chain partners to halt H20 production. Jefferies also quotes these reports, as it outlines that media reports indicate that the H20 can no longer be sold in China.
However, the bank also adds that “our industry checks indicate China has officially banned the procurement of H20 and other ‘downgraded US AI chips’ until further notice. As a result, Chinese entities are now forbidden from buying the NVIDIA GPUs, which appears to be a step up over earlier reports that have indicated that the Chinese government had simply required state-linked computing clusters to use at least 50% of domestic AI chips.
As a result, Jefferies notes that “no Chinese companies will place orders with NVDA.” The bank also adds that its channel checks in Taiwan have yielded the same results as media reports. “Our industry checks in Taiwan also indicate NVDA has suspended all packaging and server production work related to H20, also ‘until further notice,’ says the bank. As a result, Jefferies concludes that NVIDIA will be unable to generate any AI chip revenue from China, “likely until the US and China come to an agreement on trade.”
If the note bears fruit, then NVIDIA could see more headaches in the Asian country just as it is about to report its earnings. The shares are flat in premarket trading and enter the week after having lost 1.5% over the past five trading days. Since NVIDIA is in quiet period ahead of its earnings, it cannot comment on news, which creates an ample opportunity for short sellers to target the stock on any expected weakness.
