Nvidia's China Headache: By Order of the U.S. Government

The Deal With the Devil...

Right so Nvidia these bloody chip makers they're caught in a proper pickle. The Yanks in their infinite wisdom have decided to play games with China and their AI chips. Seems Trump's lot sent a letter demanding a license for Nvidia's H20 chip specifically designed for the Chinese market. 'Course this all boils down to the Yanks fretting about these chips ending up in military hands. It's always the same innit? Power control and a whole load of bloody paranoia. This is business...it always boils down to who can pull the trigger.

Write Offs and Realisations...

Now this license nonsense has landed Nvidia in the soup. They're staring down a $5.5 billion write down. Analysts are calling it the biggest in the chip industry's history. You know what that means? Less money for everyone from the top brass to the blokes on the factory floor. It's like losing a bet on a rigged horse race. Some win some lose but the house always comes out on top. You play you pay you bastard.

Growth Pains... or 'Peace Time'?

They're still growing mind you. Analysts reckon they'll report a 66% revenue jump. But that's a damn sight slower than the 250% they were pulling in a year back. Uncertainty is a dangerous game. With these new export rules nobody knows what to expect. It’s like betting on a horse race with no bloody horses! Still Morgan Stanley thinks Nvidia's taking a bigger hit than they let on. They thought the H20 would be fine and now...surprise surprise. We all got hit harder than we thought.

Huang's Lament...

Huang the Nvidia boss he's been moaning about losing market share in China. Used to be 95% now it's down to 50%. He reckons these restrictions will just spur the Chinese to build their own chips. And you know what? He's probably right. Restricting trade it's like telling a man he can't have a drink. He'll just find another way to get one. “Whiskey’s good proofing water. Tells you who’s real and who isn’t.”

The Game Continues...

Now the Yanks did scrap some of these rules but they're already cooking up new ones. It's a bloody circus. Morgan Stanley analysts are saying there'll be questions about Nvidia's replacement for the H20 long after this earnings report. Nvidia's lobbying for licenses trying to salvage something from this mess. They’re trying to sweet talk their way out of trouble. These Yanks they think they're playing chess but they're just knocking over the pieces. It's like bloody paradise but with snakes.

What's Next?

So what's the takeaway here? Nvidia's in a tight spot. They're caught between the Yanks and the Chinese between profit and politics. But you know what I always say? 'Everyone's a whore Grace. We just sell different parts of ourselves.' Nvidia's just figuring out what they're willing to sell and to whom. And trust me they'll find a way. We always do.