Key Points

On Tuesday, US Commerce Secretary Howard Lutnick confirmed that the government has cleared Nvidia to sell its H20 graphics processing units (GPUs) to China.

The move is part of broader trade talks with Beijing involving rare earth elements and is aimed at increasing China's dependence on American technology.

"We don't sell them our best stuff, not our second-best stuff, not even our third-best". Lutnick added, noting that the H20 is Nvidia's "fourth-best" chip.

In April, President Donald Trump had blocked H20 exports to China to limit China's access to advanced US technology. The resulting export freeze left Nvidia with unsold stock, leading to a USD 4.5 billion charge and a USD 2.5 billion drop in quarterly revenue.

Now that exports are back on track, demand for HBM chips--which power AI accelerators and high-performance servers by delivering faster data processing than traditional DRAM--is expected to rebound. Samsung and SK hynix, key HBM suppliers to Nvidia, are likely to see a positive impact.

The H20 chip includes both HBM3 and the newer HBM3E memory. While it may not excel at training AI models, it is optimized for inference tasks, an area of AI experiencing rapid growth.

Samsung has reportedly been supplying HBM3 for the H20 since last year. However, the earlier export ban had taken a toll, contributing to a 55.9 per cent drop in Samsung's operating profit year-over-year for the second quarter.

Meanwhile, SK hynix, which currently holds the top market share in HBM and was the first to supply HBM3E to Nvidia, stands to gain in the short term from the restored H20 exports.

"It's a short-term positive development for the AI GPU and HBM sectors that Nvidia is now able to resume exports to China," said Ryu Hyung-keun of Daishin Securities. "SK hynix is expected to benefit in the near term from the resumption of H20 shipments."

- ANI