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Gavekal Technologies, Chips
Huawei’s DeepSeek Moment In AI
Laila Khawaja
23 Apr 2025
Huawei’s latest AI cluster overcame chip-level constraints with system-level innovations. Nvidia has suspended more chip sales to China, though grey-market channels remain active. And Xiaomi’s tech progress in mobile SoC using TSMC’s advanced tech could make it a US sanction target.
Gavekal Technologies, Chips
Fighting Till The End
Laila Khawaja
16 Apr 2025
Beiing has tightened its chip tariff rule that targets made-in-America chips. US-based integrated device manufacturers are expected to bear the brunt of the impact. Also, the move to restrict H20 sales to China signals President Trump’s increasing pressure on big tech, while clearing the path for Beijing to accelerate domestic chip adoption. Nvidia is unlikely to quickly replace the significant lost revenue amid tariff uncertainties. Finally, Beijing is likely leveraging the antitrust probe to pressure DuPont into withdrawing its legal complaint against its Chinese competitors.
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China’s Retaliation Toolkit
China has a wide range of retaliatory tools to respond to US tariffs and sanctions, including counter tariffs, targeted sanctions, supply chain controls, and market access restrictions. While US measures towards China have centered around tariffs and technology export controls, China’s ability to disrupt supply chain flows and restrict US companies’ access to its vast domestic market could significantly impact American businesses, consumers, and reindustrialization efforts, in addition to the self-inflicted harm of Trump’s own tariff policies.
Nvidia’s DeepSeek Dilemma
Early coverage of DeepSeek’s cost-efficient open-source large language models highlighted the risk to Nvidia that algorithmic and architectural innovations could reduce demand for its chips. The reality is otherwise: Chinese companies are ramping up orders for Nvidia’s sanction-compliant H20 chips to support the surging demand for inference—the process of running trained AI models in real-world applications.
Assessing Beijing’s Proposed Probe Of US Legacy Chips
Beijing recently announced plans to launch an anti-dumping probe into imported legacy chips from US chipmakers. The move is widely perceived as a retaliatory measure: it mirrors the US probe into Chinese legacy chips initiated in late Dec and coincides with a slew of sanctions enacted by the outgoing Biden Administration and tariff threats from the newly inaugurated Trump Administration.
Why Is Beijing Probing Nvidia?
China’s top market regulator in early Dec launched an antitrust investigation into Nvidia, accusing the US chipmaker of violating conditions tied to its 2020 acquisition of Mellanox Technologies (“Mellanox”), including commitments to continue chip supplies. The probe comes with little explanation from the regulator. Yet, insights from Communist Party mouthpieces suggest two key drivers.
Beijing Chip Conference Theme: “De-Americanization”
Gavekal Fathom China attended a recent chip conference in Beijing where the dominant theme was stripping the US out of China’s semiconductor supply chains. Beijing used the event to court allies, particularly South Korea. Chinese companies at the event confirm that Beijing is pressuring them to “de-Americanize” their supply chains, and we observed company executives briefing government officials about their efforts.
Beijing Threatens Intel
Beijing’s threats against Intel serve as a warning to foreign chip companies that they must meet new conditions to retain market access.