Not sharing the chips
On Nvidia, 25% tariffs, and the future of the AI-driven chip industry
Reports from the Financial Times say that China’s government has blocked imports of a powerful computer chip from Nvidia, for which orders had been thought to exceed one million. (How powerful? Nvidia describes the H200 in terms of teraflops and hundreds of gigabytes of memory.)
■ If true, the real story could be any of several things: It could easily be an attempt to gain negotiating leverage, since chips are a big business and these particular chips were suddenly subjected to a 25% tariff just the other day.
■ It could also be a form of Chinese tech protectionism: The high demand for the chips within China is evident from the volume of orders, so the government there may wish to show favor to its own chip-makers. Protectionism is a common behavior to begin with, but the Communist Party is notorious for taking it to extremes within its semi-planned economy full of semi-government-owned tech companies.
■ The two causal explanations don’t even have to be mutually exclusive: It’s entirely possible that forcing a trade renegotiation is a short-term tactical objective, while sheltering a domestic chip industry is a long-term strategic play. Things get distorted quickly within a system where the government takes significant ownership stakes in companies.
■ Where this goes next depends a great deal on human psychology: Whether American eagerness to close a sale prevails, or whether Chinese eagerness to put some of the market’s fastest chips to work wins instead.