Is Nvidia Benefiting From US Sanctions On China?

Nvidia Corp NVDA might benefit from the U.S. advanced artificial intelligence technology embargo on China. Chinese gamers will now have to dole out more than double the list price of Nvidia's flagship consumer graphics card. 

The restrictions also fuel the chances of chips entering China via unofficial routes, including creating an underground market.

Prices for the year-old GeForce RTX 4090, originally listed at $1,599, climbed up to the levels of 29,000 yuan ($3,970) on Alibaba Group Holding Ltd's BABA Taobao marketplace as retailers begin to pull it from their shelves, Bloomberg reports. 

The U.S. prohibited China's access to RTX 4090 without a U.S. government license after its performance exceeded the threshold set by American officials.

The U.S. imposed fresh sanctions, citing national security threats. The West aims to prevent China's military from accessing gear that can help develop advanced AI applications, targeting specialized accelerator chips like Nvidia's A800. 

Desktop PCs that include the RTX 4090 card among their specifications are still available to buy from some Chinese outlets and will also face U.S. curbs.

Meanwhile, Nvidia remains focused on consolidating its fortress by expanding collaboration with critical Apple Inc AAPL partner, Hon Hai Precision Industry Co Ltd HNHPF, operating as Foxconn to develop a new class of data centers, including the development of AI-powered electric vehicle and robotics platforms.

While on one hand, Nvidia had acknowledged no harm from the U.S. sanctions, the U.S. chipmakers have been pressing the government to go softer on the China policy.

Analysts remain divided over the impact of the restrictions on Nvidia, considering the substantial size of the long-term TAM, regardless of China's participation.

Price Action: NVDA shares traded lower by 0.95% at $417.03 premarket on the last check Friday.