US Chip Exports to China: A $12.5B Windfall?

Reports indicating a possible restart of GPU sales to China have reignited discussions about the financial benefits for U.S. chip manufacturers Nvidia and AMD. Analyst Simon Leopold suggests that AMD could achieve an incremental revenue of $500 million to $800 million, coupled with a non-GAAP EPS increase of $0.10 to $0.20. For Nvidia, the financial projections are considerably higher, with an estimated additional revenue of $7 billion to $12.5 billion, potentially adding $0.15 to $0.30 to non-GAAP EPS by 2026.

Key uncertainties persist, including whether the Chinese government will permit its cloud operators to acquire advanced GPUs and how the U.S. government's 15% export license fee will be handled. Speculation for AMD centers on China-compliant accelerator orders, potentially involving 40,000 to 50,000 MI308 units for Alibaba, translating to significant sales spread over several quarters. Despite these possibilities, hurdles like approval timelines and enforcement of AI semiconductor restrictions remain.

Nvidia faces a similar scenario, with discussions around limited shipments of H200 GPUs to major Chinese hyperscalers. Even moderate volumes, with estimated selling prices between $20,000 and $25,000 per unit, could generate billions in revenue over time. However, the article emphasizes that China represents a small fraction of Nvidia's data center business, with growth predominantly fueled by U.S. hyperscalers and enterprise clients.