What are U.S. export controls on AI chips?

U.S. export controls are government restrictions that limit the sale of advanced semiconductor technology, including AI chips, to certain countries like China. These restrictions are intended to prevent sensitive technology from being used in ways that might compromise national security. For companies like Nvidia, this means they cannot sell their most advanced chips to Chinese companies without special permission, which is why they've developed modified versions that comply with these regulations.

What makes Nvidia's modified chips for China different?

Nvidia's modified chips for the Chinese market are specially designed to comply with U.S. export restrictions while still offering strong AI performance. These chips have their processing capabilities intentionally limited to stay below certain thresholds set by U.S. regulations. While not as powerful as Nvidia's unrestricted chips, they still provide significant performance for AI applications, allowing Chinese companies to continue developing AI technology and giving Nvidia a way to maintain its presence in this important market.

How does a foundry like TSMC fit into the semiconductor supply chain?

A foundry like TSMC (Taiwan Semiconductor Manufacturing Company) is essentially a specialized factory that manufactures chips designed by other companies. Companies like Nvidia design advanced chips but don't own the facilities to produce them. Instead, they contract with foundries like TSMC that have the extremely expensive equipment and expertise needed to fabricate these complex semiconductors. This relationship makes TSMC a critical link in the supply chain—when Nvidia sells more chips to China, TSMC receives more manufacturing orders, potentially boosting its revenue.

What is high-bandwidth memory (HBM) and why is it important for AI?

High-bandwidth memory (HBM) is a type of computer memory designed for high-performance computing tasks, especially AI. Unlike regular memory, HBM stacks memory chips vertically (like a tiny skyscraper) and places them very close to the processor, allowing for much faster data transfer. This is crucial for AI applications because they process enormous amounts of data very quickly. Companies like Micron (MU) that produce HBM are essential to the AI ecosystem, as more powerful AI chips require more advanced memory solutions to reach their full potential.

What does "projected profit" mean in stock analysis?

Projected profit refers to how much money a company is expected to make in the future, typically over the next year or several years. These projections are calculated by financial analysts who study the company's business model, growth patterns, market conditions, and other factors. For investors, projected profit is an important indicator of a company's potential value growth. In the context of companies in this stock group, strong projected profits might suggest that a company is well-positioned to benefit from Nvidia's strategy in China and the broader AI industry expansion.

15 handpicked stocks

Nvidia's China Pivot: Resuming AI Chip Sales

This carefully selected group of stocks represents companies at the center of Nvidia's strategic move to sell compliant AI chips in China. Handpicked by our analysts, these investments span from Nvidia itself to its critical suppliers and Chinese tech companies that will gain access to these specialized GPUs.

Han Tan | Market Analyst

Updated 2 days ago | Published at juillet 15