Nvidia’s (NVDA) most advanced artificial intelligence chips are finding their way to Chinese buyers in spite of Washington’s increasingly tough export restrictions, it has been reported. According to the Wall Street Journal, NVDA’s Blackwell chips, which it started shipping in December to customers globally, are landing in China as traders navigate their way around U.S. controls over the sale of AI chips.
It says buyers are circumventing restrictions, which have been in place since 2022 and recently tightened, by routing orders via third parties in nearby countries like Vietnam, Malaysia and Taiwan. The problem underscores the difficulty the White House has in blocking off Beijing’s access to the most sophisticated chips, as highlighted by the launch of DeepSeek’s AI model in January.
NVDA Chips Pour into China
While Blackwell chips are the most technologically advanced, other AI chips are finding their way to China despite controls.
It’s thought for instance that Nvidia’s H800 chips, which are restricted for sale to China, may have been used by DeepSeek to train the R1 and its earlier V3 models. The U.S. first imposed export restrictions on the chips in 2022 and later, in October 2023, barred the H800 from sale to China. Sources indicated to Bloomberg and Reuters news agencies that the purchases may have been routed through Singapore, which accounts for 20% of NVDA sales. Meanwhile the Financial Times reports today that Singapore has charged three men suspected to be involved in Nvidia semiconductor sales that may breach U.S. export controls
The stripped down H20 chip is allowed for export to China but now the White House could ban it too. President Donald Trump is reportedly considering tightening restrictions on NVDA’s sales of its H20 chips for the China market. The WSJ notes that Chinese tech giants have increased the pace of purchases of the H20 chips ahead of it being subject to export controls as well as the more powerful chips already covered. In a research note today Jefferies analysts suggest the U.S. could further tighten chip export controls.
Commerce Secretary Howard Lutnick is known to be concerned about AI chips being siphoned off to China.. “Nvidia’s chips, which they bought tons of, and they found their ways around it, drive their DeepSeek model,” he said at his confirmation hearing last month. “It’s got to end,” he added.
As a parting shot at China, outgoing president Joe Biden introduced tougher chip controls in his final week of office. He introduced a layered approach that places countries into three categories, with a limited number of U.S. allies in the first group with unlimited access to U.S. technology. The second includes U.S. adversaries who could not import any chips. The third, and perhaps most important, is a majority of countries from the Middle East and Asia who would face a limit on the total amount of computing power they could import.
Is NVDA a Good Stock to Buy?
On Wall Street, analysts have a Strong Buy consensus rating on NVDA stock, based on 38 Buys and three Holds. The average NVDA price target of $178.66 implies about 43% upside to the current level after the stock dipped into correction territory this year.https://www.tipranks.com/stocks/nvda/forecast
