China Urges Local Firms to Avoid Nvidia H20 Chips | Bloomberg Tech 8/12/2025

Key Concepts:

• NVIDIA H20 processors and export controls to China
• US-China trade relations and semiconductor industry
• Elon Musk's accusations against Apple's App Store practices
• Generative AI and its impact on chipmakers (NVIDIA, AMD, Intel)
• Circle (stablecoin network) and its revenue model
• Perplexity's unsolicited bid for Google's Chrome browser
• Labor statistics and economic indicators
• Taylor Swift's surprise album announcement

1. US-China Trade and Semiconductor Industry

• NVIDIA H20 Processors: Beijing is reportedly urging local companies to avoid using NVIDIA's H20 processors. This follows a report that Chinese authorities have urged various Chinese entities to hold off on ordering the technology.
• Revenue Split Deal: The US President reportedly cut a deal with NVIDIA and AMD for a revenue split on accelerator sales in China. The specifics of this deal, including the percentage cut for the US government, remain unclear.
• White House Perspective: The White House is considering leveraging export controls for new government revenues, a model reminiscent of the Trump administration.
• Analyst Concerns: Analysts suggest that charging premiums for advanced technology exports could open the door to issues like military sales.
• Low-Power Version (ME 30): There was allusion to Jensen Huang (NVIDIA CEO) discussing a low-power version of chips (ME 30) with the President, but NVIDIA has not confirmed this. Analysts view this as a tactic in broader trade negotiations.
• China's Response: China's potential pullback from pared-down chips raises concerns about long-term demand and access to the Chinese market, the largest chip market in the world.
• Rules of the Game: Chipmakers are trying to understand the "rules of the game" to operate in China, including potential political concessions needed to access the market.
• Ad Hoc Deals: The US President cutting an ad hoc deal for a share of revenue in exchange for export licenses is seen as a "read and react" situation rather than something that can be modeled or forecasted.
• Impact on Generative AI: Concerns exist that cutting off China could lead them to develop domestic alternatives, impacting the global opportunity for generative AI.
• Intel's Situation: Intel's CEO also met with the President. There were positive signs that pressure for a leadership change at Intel might be easing.
• China's Domestic Chip Protection: China is actively protecting its domestic chip industry and seeking better deals in trade negotiations.
• Military Concerns: There are concerns about how China would use the chips and a military.

2. Elon Musk vs. Apple: App Store Controversy

• Antitrust Accusations: Elon Musk accused Apple of antitrust practices, claiming they favor OpenAI by artificially promoting ChatGPT in the App Store rankings.
• Algorithm Manipulation: Musk alleges Apple is putting its "thumb on the scale" by manipulating the App Store algorithm to favor OpenAI.
• Community Notes: X's community notes pointed out that OpenAI hasn't always been at the top, and others have eclipsed it since the OpenAI and Apple cut.
• Sam Altman's Response: Sam Altman (OpenAI CEO) responded, noting Musk's own manipulation of the X algorithm.
• Apple's Partnership with OpenAI: Apple announced a partnership with ChatGPT last year, integrating some of OpenAI's technology into the iPhone. Musk claims this is the reason for the favorable treatment.
• Developer Complaints: Musk is not the first to criticize Apple's App Store practices. Facebook and Mark Zuckerberg have also raised concerns about anticompetitive behavior and App Store fees.
• Litigation Threat: Musk has threatened Apple with litigation in an antitrust context.
• Investor Perspective: An investor believes Musk is acting to gain shelf space, raise awareness, and potentially get concessions from Apple.
• AI Opportunity within Tesla: There is discussion about the AI opportunity within Tesla and whether they should absorb xAI.
• Dojo Program: Elon Musk said for the Dojo program to slow down. A lot of that talent has been reassigned and the other chip efforts.

3. Circle and Stablecoin Network

• Revenue Model: Circle's revenue comes from two primary sources: growth in USDC in circulation and new services (subscriptions, service fees, and transaction fees).
• USDC Growth: Circle saw 90% year-over-year growth in USDC in circulation.
• ARC Blockchain: Circle is building ARC, a blockchain network designed for finance, with fees paid in USDC and other stablecoins.
• Deterministic Finality: ARC is designed for deterministic finality, a key requirement for bank regulators.
• Interoperability: Circle aims for broad interoperability across 24 different blockchain networks.
• Reserve Returns: Circle monetizes the money stock on the network through reserve returns.
• M&A Strategy: Circle is primarily focused on organic growth and software-powered innovation. They have made acquisitions to accelerate product development and acquire intellectual property.

4. Other News and Developments

• GM's Autonomous Vehicle Ambitions: GM is looking to restart development of new driverless cars, focusing on autonomous vehicles for personal use.
• GitHub CEO Stepping Down: The GitHub CEO is stepping down and will become part of the core AI team at Microsoft.
• ESPN's Streaming Plans: ESPN is aiming to lure back subscribers with a new streaming service offering live sports and original programming.
• European Software Weakness: European software names are under pressure due to concerns that AI will render their earnings obsolete.
• Perplexity's Bid for Chrome: Perplexity made an unsolicited bid of $34.5 billion to Google for its Chrome browser. This is seen as a long shot, especially since Google is not actively looking to sell Chrome.
• Labor Statistics Controversy: There is controversy surrounding a potential nominee to oversee labor statistics, who suggested suspending the monthly jobs report until the numbers are "fixed."
• Taylor Swift's New Album: Taylor Swift announced a surprise new album on her boyfriend's podcast.

5. Geopolitical Story of U.S. and China

• China's Performance: A lot of the signaling it has been engaged in is largely performative.
• China's Economic Considerations: There are economic considerations but there are also security wants.
• China's Homegrown Chip Industry: The Chinese have poured money into the effort to develop a homegrown chip industry.
• Rare Earth: The Chinese themselves have been I think a bit surprised by how potent of a weapon the rare earth controls have been in these trade negotiations.

6. Conclusion

The broadcast covers a range of topics in the tech and financial sectors, highlighting the complex interplay between technology, geopolitics, and market dynamics. Key takeaways include the ongoing tensions in US-China trade relations, particularly in the semiconductor industry, the evolving landscape of AI and its impact on various sectors, and the competitive dynamics in the app store ecosystem. The discussion also emphasizes the importance of understanding the "rules of the game" in a rapidly changing environment and the need for companies to be agile and adaptable in their strategies.