Daily: U.S. allows H20 chips again
5 min read.
Highlights
U.S. allows H20 chips. The U.S. government allows Nvidia to sell the H20 AI chip to China again. The Trump administration had blocked its sale in April. Since then, Nvidia has rapidly developed a new regulation-compliant chip, the RTX PRO, based on the latest Blackwell architecture but with scaled down features, such as memory bandwidth. This news comes off the heels of a meeting between Trump and Nvidia CEO Jensen Huang. I suspect this will, on the margins, hurt U.S.’ ability to stay ahead of China, especially given news that DeepSeek and others seem to be desperate for more Nvidia chips. But it could be part of a broader strategy of detente with China.
China approves merger. China, in a parallel sign that relations between the two largest economies are thawing, approved the merger between U.S. chip EDA companies Synopsys and Ansys. This has been held up by Chinese regulators for months. But apparently, it only took China’s regulatory body one day to approve once things got moving again. I don’t know the inner workings of Chinese agencies, but it goes to show that things can move very quickly in China when they want it to.
U.S. probes drones and polysilicon. But, in some mixed signals, Washington has launched a Section 232 national security investigation into drones and polysilicon, a material used for chips and solar panels. China has ~90% of the consumer drone market and ~90% of the polysilicon market, so this is a fairly targeted move. It will take months to complete the probe, which will likely end in a legally valid tariff imposed on the goods. Tariffs under this authority, including auto, copper, steel aluminium, have ranged from 25-50%.
Thanks for reading.
1. Policy and Geopolitics
1.1
Bloomberg (07/15): Nvidia to Resume H20 Chip Sales to China in Surprise US Reversal
Nvidia Corp. plans to resume sales of its H20 artificial intelligence accelerator to China based on assurances from Washington that such shipments would be approved, a dramatic reversal from the Trump administration’s earlier stance.
US government officials have told Nvidia that they would green-light export licenses for the H20, the company said in a blog post on Monday. That China-specific variant of Nvidia’s AI chips was created to comply with earlier trade curbs, but has since April also been blocked from sale in China.
Nvidia also plans to debut a new China-focused chip — the RTX PRO — that the company described as “fully compliant,” meaning that it falls below the technical thresholds that would necessitate Washington’s approval in the first place.
1.2
FT (07/15): US probes imports of drones and critical material in chips and solar panels
The US commerce department has launched two national security probes that could lead to tariffs on drones and a raw material used for chips and solar panels.
In notices published on Monday evening, the commerce department said it would examine imports of unmanned aircraft systems and their parts and components, and would separately carry out a study of polysilicon supply chains.
1.3
Bloomberg (07/14): China Lags in Chip Lithography, Influential DC Think Tank Says
China faces significant challenges advancing its semiconductor lithography, a key hurdle for its drive toward technological self-sufficiency and superiority in the trade war with the US.
Shanghai Micro Electronics Equipment Group Co., the country’s leading provider of such technology, has been able to carve out only a 4% share of the market for older-generation lithography, according to the Center for Security and Emerging Technology. The DC-based independent think tank is often consulted by various US government agencies.
1.4
TechCrunch (07/14): Malaysia will require trade permits for US AI chips
Malaysia is taking on a bigger role in helping the U.S. prevent advanced AI chips from ending up in China.
The Malaysian Ministry of Investment, Trade and Industry announced new restrictions on exporting AI chips of U.S. origin out of its country on Monday. Individuals and companies are now required to notify Malaysian authorities at least 30 days in advance when they are exporting or transshipping U.S. AI chips, effective immediately.
1.5
SCMP (07/11): Stanford-educated expert leads China’s new semiconductor school with YMTC support
Wuhan University has become the latest institution to join China’s push for self-reliance in semiconductors by establishing the School of Integrated Circuits, led by a scientist educated at Stanford University.
Liu Sheng, a member of the Chinese Academy of Sciences who earned a doctorate in mechanical engineering from Stanford in 1992, has been appointed as the inaugural dean of the new school.
2. Economy, Finance, and Business
2.1
FT (07/14): China approves $35bn Synopsys chip software deal after US eases export curbs
China’s antitrust regulator has conditionally approved a $35bn takeover by US tech company Synopsys of smaller rival Ansys, with its decision coming soon after the Trump administration quietly eased restrictions on exports of chip design software tools.
Monday’s green light comes after China’s State Administration for Market Regulation (SAMR) paused the approval process in May, the Beijing-based regulator said in a statement, confirming a Financial Times report last month. Its statement revealed a quick turnaround, with SAMR taking just one day to grant the approval after it resumed the process last Friday.
2.2
Reuters (07/14): Broadcom scraps microchip plant investment in Spain, report says
Broadcom has pulled out of plans to invest in a microchip plant in Spain as talks with the government have broken down, news agency Europa Press reported on Sunday citing unidentified sources.
The decision will be a blow for Spain's ambition to become a relevant player in the microchip industry in Europe. The government has previously said it would allocate some 12 billion euros ($14 billion) for the semiconductor and microchip industry, using some of the European Union's pandemic relief funds.
2.3
Nikkei (07/14): Japan-backed chipmaker JS Foundry files for bankruptcy
Japanese government-backed contract chipmaker JS Foundry has filed for bankruptcy protection with the Tokyo District Court on Monday.
The Tokyo-based company is a producer of power semiconductors that are typically used for regulating electric power flows and installed in large electric equipment such as electric vehicles, home appliances and trains.
3. Technology
3.1
TrendForce (07/15): LG Makes Bold Move in HBM Race with Hybrid Bonders, Reportedly Sets Sights by 2028
As Samsung and SK hynix charge ahead in the HBM race, an unexpected player is said to be entering the arena from a different angle. LG Electronics is reportedly making a bold push into the semiconductor equipment space by developing hybrid bonders for HBM, according to Sedaily.
Sedaily suggests a company spokesperson confirmed that LG’s Production Engineering Research Institute (PRI) is indeed developing the equipment, which is reportedly targeting mass production by 2028.
3.2
TrendForce (07/14): Intel on the Move: Nova Lake Reportedly Tapes Out on TSMC’s 2nm, with 18A Yields Gaining Speed
Despite challenges from massive layoffs, Intel is showing promising progress with its next-gen flagship processor and 18A yields. According to TechPowerUp and SemiAccurate, Intel’s “Nova Lake-S” client CPU has reportedly taped out at TSMC’s 2nm fab in Taiwan.
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