Nomura reports that NVIDIA (NVDA, Financial) has been notified by the U.S. government that it requires a license to export its H20 artificial intelligence (AI) chips to China. These chips were initially designed for the Chinese market. NVIDIA expects to incur approximately $5.5 billion in expenses related to H20's inventory, procurement commitments, and associated reserves, which will be reflected in the financial report for the first quarter of the fiscal year ending 2026.
This development may pose risks to the AI revenue of Kingsoft Cloud (KC) due to its reliance on NVIDIA’s AI servers for large language model (LLM) training and AI application development. However, Kingsoft Cloud's capital expenditure may decrease as a result. The demand for AI services remains strong among Kingsoft Cloud's major clients, driven by NVIDIA's superior training efficiency with its large-scale GPU clusters, supported by NVLink technology and CUDA systems.
