Nvidia’s China Comeback: What It Means for Korean Chipmakers

Anticipation is growing for a boost to Korean chipmakers Samsung Electronics and SK hynix, as the U.S. reversal of restrictions on Nvidia Corporation’s AI chip sales to China is expected to revive demand for their high-bandwidth memory, or HBM, chips.

On Tuesday, U.S. Commerce Secretary Howard Lutnick confirmed that the government had approved Nvidia Corporation’s sales of its H20 graphics processing units to China. The decision, he explained, is part of broader negotiations with Beijing on rare earth materials and a strategic effort to make China dependent on American technology.

\”We don’t sell them our best stuff, not our second-best stuff, not even our third-best,\” Lutnick stated, noting that the H20 is Nvidia Corporation’s \”fourth-best\” chip.

The Trump administration had previously restricted exports of the H20 chips to China in April, as part of efforts to curb Beijing’s access to cutting-edge American technology.

\”The idea is to sell the Chinese enough that their developers become reliant on the American technology stack,\” Lutnick added.

The restriction had left Nvidia Corporation with unsold inventory, resulting in a $4.5 billion charge and a $2.5 billion hit to its quarterly revenue.

With Nvidia Corporation now poised to resume sales in China, Korean chipmakers are expected to benefit from the renewed demand for HBMs. These critical memory components, used in AI accelerators and high-performance servers, enable significantly faster data transfer compared to conventional DRAM.

Nvidia Corporation’s H20 chip features fourth-generation HBM3 and the latest fifth-generation HBM3E. While it may lag in training AI models, it excels in inference – the AI process of generating answers to users – which is currently the fastest-growing segment in the AI chip market.

Samsung has reportedly been supplying HBM3 for Nvidia Corporation’s H20 since last year. However, the U.S. trade restrictions appear to have impacted the company’s performance, with its operating profit plummeting 55.9 percent year-over-year in the April-June period.

Although Samsung’s fifth-generation HBM3E has yet to pass Nvidia Corporation’s quality certification, the resumption of H20 exports to China is expected to help the company expand HBM shipments.

Samsung also stands to benefit from Nvidia Corporation’s upcoming low-end AI chip for the Chinese market, known as the B40, expected to launch later this year. Unlike the H20, the B40 will be equipped with GDDR7, a next-generation graphics DRAM capable of processing more data at once than conventional DRAM. Samsung was the first in the industry to develop a 12-nanometer, 24-gigabit GDDR7 chip.

SK hynix, the global leader in HBM market share and the first company worldwide to supply HBM3E to Nvidia Corporation, is also expected to see a sales boost.

\”Nvidia Corporation’s ability to resume exports to China is a short-term positive development for the AI GPU and HBM sectors,\” said Ryu Hyung-keun, an analyst at Daishin Securities. \”SK hynix is likely to benefit in the near term from the resumption of H20 shipments.\”

Sohn In-joon, an analyst at Heungkuk Securities, noted that while the export resumption is likely to benefit SK hynix more significantly, it could also offer Samsung an opportunity to pass Nvidia Corporation’s qualification test for its HBM3E chips amid tight supply conditions.

Industry officials are expressing hope that the latest approval of Nvidia Corporation’s exports could signal a broader shift in U.S. trade policy, potentially paving the way for further easing of chip export restrictions to China.

\”The reopening of the Chinese market sends a positive signal for the entire industry. It presents a major opportunity by expanding the demand base for semiconductors,\” one industry official remarked.