There are many reasons why China is not going to allow unlimited volumes of H200 chips to flood the Chinese market. First and foremost, it means China is helping Nvidia to regain the Chinese market, which will eat the market share of domestic chipmakers and slow China's aim to be independent of the USA.
Secondly, what will happen if after allowing Nvidia H200 chips to enter the Chinese domestic market and getting those AI developers hooked on those chips, Trump may wake up from the wrong side of bed one fine day and decides to pull the plug to stop those chips from being sold to China. You can see the consequences of this option just by looking at Trump's behavior today.
Thirdly, China is truly serious about moving away from depending on USA chips and is not going to be lured into a situation of sabotaging its own agenda. China wants its AI developers and industrial chains to use domestically made chips. China will pour more subsidies into funding chip development which it is very well capable of doing. China has little economic constraints, has cheap energy, is dominating in AI manpower development, is dominating in research and development.
Anonymous
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China is going to cripple foreign chipmakers with its rare earth control. The USA and allies are rushing to form alliances to counter China, but how realistic are those moves? It is too little too late. Trump can boast about having so much rare earth by next year that he does not know what to do with them. Without Chinese processing and refining facilities, those are just dirt dug up for nothing. Yes, keep boasting and let us see what comes from it. China is just sitting tight and waiting for the circus to come to town.
Just by crippling ASML, the lithography machine manufacturer, with its rare earth deprivation will also cripple all the other chipmakers in Arizona and Japan eventually. Sure, ASML and other downstream chipmakers may have stocks of rare earth elements to tide them over for the time being, but in this cut-throat world of cost-saving, keeping only 'just in time' stocks for about one or two weeks or even shorter is the norm. What happens when those stocks run out is a moot question.
Like automakers in USA, Europe and Japan, cutting off Nexperia chips by China saw Honda, Nissan and VW cutting production and suffering massive losses. They had exhausted their Nexperia supplied chips and cannot move forward with their production. They had everything necessary to make a car, except just the Nexperia chips alone, which stalled all the production. Some may resort to black market deals, but China will make sure that the loophole will close, just like the attempts to smuggle soya beans using fake country of origin being discovered and closed up. South Korea and India were also reselling rare earth sourced from China and are now suffering the consequences in their own industry.
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