TLDR
- China’s Cyberspace Administration banned major tech companies from buying Nvidia’s RTX Pro 6000D AI chips
- NVDA stock dropped 1% in premarket trading after falling 1.6% Tuesday as regulatory pressure builds
- The $7,000 RTX6000D chip suffered weak demand due to performance issues and high pricing
- Wall Street analysts projected 1.5-2 million unit sales, but actual orders fell short of expectations
- China accused Nvidia of antimonopoly violations while pushing domestic chip alternatives
Nvidia stock declined Wednesday after China’s internet regulator banned the country’s largest technology companies from purchasing the chipmaker’s custom artificial intelligence semiconductors.
The Cyberspace Administration of China ordered ByteDance, Alibaba, and Baidu to halt testing and cancel orders for Nvidia’s RTX Pro 6000D chips. The Financial Times reported the directive, citing sources with knowledge of the matter.
NVDA shares fell 1% to $173.12 in premarket trading following Tuesday’s 1.6% decline. The stock has struggled since the company’s latest earnings report as investors assess China market challenges.
RTX6000D Performance Issues Hurt Demand
The RTX Pro 6000D chip was designed to comply with U.S. export restrictions while serving Chinese customers. Nvidia created this lower-tier product to maintain market access under trade regulations.
However, Chinese buyers criticized the chip’s performance relative to its $7,000 price tag. Many customers found the RTX6000D too slow for advanced AI workloads while being overpriced compared to alternatives.
Some buyers noted the banned RTX 5090 offers superior performance on gray markets at under half the RTX6000D’s cost.
JPMorgan analysts projected 1.5 million RTX6000D unit sales for the second half of 2024. Morgan Stanley forecast two million units. Early market response showed actual orders falling short of these Wall Street expectations.
Chinese companies continue waiting for Nvidia H20 chip updates. That model received U.S. approval in July but shipments remain stalled. Local firms also hope authorities will clear the more powerful B30A chip for import.
China Promotes Domestic Chip Development
The ban reflects China’s strategy to accelerate domestic semiconductor adoption. Alibaba promotes its T-Head processor line, which secured partnerships with major wireless carriers.
Baidu and Tencent develop in-house chip models as alternatives to foreign semiconductors. This shift demonstrates how trade restrictions influence local technology decisions.
China this week accused Nvidia of violating antimonopoly laws. The company stated it complies with regulations and will cooperate with government agencies.
IG analyst Chris Beauchamp noted approximately 40% of Nvidia’s sales come from China. “A domestically-imposed ban is much harder to avoid than U.S. export restrictions,” he said.
Other semiconductor stocks declined in premarket trading. Advanced Micro Devices dropped 1.1% while Broadcom fell 0.2%.
Nvidia announced an AI infrastructure partnership with British company Nscale during President Trump’s U.K. state visit.
