Recent US-China trade truce talks have left unresolved the critical issue of export restrictions on specialized rare earth materials essential for American military hardware, according to a Reuters report.
Beijing is yet to commit to exporting certain rare earth magnets needed by US suppliers for fighter jets and missile systems, sources told the publication.
Further, China is reportedly tying future shipments to the US allowing it to access AI semiconductors, which were curbed due to concerns over their potential military applications.
Analysts at Wedbush believe that if Reuters is correct, this news could potentially open the door to some resumption of AI chip supply to China.
“We are uncertain what AI chips China is looking for (H20, B200, etc.) and whether the US will negotiate a resumption of any supply that is now banned,” they wrote.
The analysts wrote that, while they would be shocked if the US allowed Nvidia Corp (NASDAQ:NVDA, ETR:NVD) or Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) to ship their latest offering to China, a resumption in H20 and MI308 shipments would create a “significant tailwind” for the two companies.
“The former indicated it expected to ship $8 billion worth of product into China in the fiscal second quarter before US restrictions, and with AMD talking to an $800 million charge tied to new US regulations,” they wrote.