NVIDIA shares down 1.4% premarket; report says Huawei develops new AI chip

NVIDIA shares down 1.4% premarket; report says Huawei develops new AI chip

NVIDIA (NVDA) stock experienced a premarket decline of 1.4% on Friday, April 28, 2025, following a Reuters report indicating that Chinese tech giant Huawei is set to begin mass shipments of its new AI chip, the 910C, next month. This development comes amidst ongoing US trade restrictions on NVIDIA's H20 chips, which are designed for the Chinese market [1].

Huawei's 910C chip is reportedly competitive with NVIDIA's H100 AI chips, which are two generations behind its latest Blackwell chips. The H100 GPUs (graphics processing units) were banned from export to China by the US government in 2022. The new chip from Huawei aims to fill the void left by NVIDIA's restricted sales, potentially capturing significant market share in China [2].

The report also highlights the broader impact of the US trade ban on NVIDIA's operations. The company has already taken a write-off of up to $5.5 billion for inventory in its fiscal first quarter, indicating that it does not expect to be granted any export licenses. NVIDIA rival AMD (AMD) also faces similar trade bans and is expected to take a charge of up to $800 million to write off inventory and purchase commitments related to AI chip sales to China [1].

The ongoing tensions between the US and China in the semiconductor industry have led to significant market volatility. NVIDIA's stock has seen a year-to-date decline of over 28% due to concerns about trade restrictions and ongoing demand for AI processors for data centers. Fellow chip stocks such as Advanced Micro Devices (AMD), Qualcomm (QCOM), and Broadcom (AVGO) have also experienced similar declines [2].

NVIDIA CEO Jensen Huang visited China last week to meet with trade officials and discuss the company's manufacturing footprint. The company has pledged $500 billion to the US AI supply chain buildout and has been critical of the tightening US trade policy under the prior administration [2].

In response to the new AI chip from Huawei, NVIDIA has stated that it follows trade rules "to the letter." However, the company has also argued that tighter rules would only bolster foreign competition, potentially weakening America's global competitiveness in the AI market [2].

The ongoing developments in the AI chip market have significant implications for investors. The correlation between NVIDIA's stock price and AI-related cryptocurrencies has strengthened, with a Pearson correlation coefficient of 0.72 on April 21, highlighting the interconnectedness of AI and crypto markets [3]. Investors should closely monitor these market dynamics and adjust their positions accordingly.

References:
[1] https://www.investors.com/news/technology/nvidia-stock-china-huawei-ai-chips/
[2] https://finance.yahoo.com/news/nvidia-stock-falls-as-chinas-huawei-reportedly-boosts-ai-chip-production-after-trumps-export-ban-125546073.html
[3] https://blockchain.news/flashnews/nvidia-shares-drop-over-3-amid-huawei-s-ai-chip-launch-and-us-export-restrictions

Ask Aime: Will NVIDIA's trade restrictions spell doom for its AI chip market?