China has reportedly advised local firms against using Nvidia’s H20 chips, particularly for government-related activities. Notices sent in recent weeks urge companies to avoid these processors, described as “less-advanced” semiconductors by authorities.
The impact on AMD’s MI308 chips remains uncertain. Both Nvidia and AMD had previously been approved by the Trump administration to sell lower-end AI chips to China, with a 15% revenue share for the U.S. government. This new guidance challenges that agreement, particularly if Chinese enterprises are directed to comply with Beijing’s instructions against such purchases.
Uncertainty For Nvidia Revenue
This new guidance from Beijing introduces significant uncertainty for Nvidia’s revenue projections from China. We should anticipate a spike in implied volatility for NVDA options over the coming trading sessions. This means both put and call options will likely become more expensive as the market prices in a wider range of potential outcomes.
For those anticipating a downturn, buying put options on Nvidia is the most direct strategy. With NVDA closing near $1,150 last week, we are already seeing a surge in volume for the September and October 2025 puts, particularly around the $1,100 and $1,050 strike prices. This suggests traders are positioning for a potential pullback based on this geopolitical headwind.
The ambiguity around AMD’s MI308 chips adds another layer of complexity, though we expect negative sentiment to spill over. Traders might consider protective puts on the broader semiconductor sector, perhaps using an ETF like SOXX, as a hedge against contagion. We saw a similar sector-wide reaction following the Commerce Department’s expanded restrictions back in late 2023.
Market Stability And Revenue Challenges
The market had begun to price in some stability from the plan allowing lower-end chip sales, which was expected to create a revenue floor. This guidance from Beijing directly challenges that assumption and puts expected future earnings at risk. This aligns with recent July 2025 customs data that showed a 28% month-over-month decline in specialized semiconductor imports by Chinese firms, signaling this cooling trend was already underway.
We must now watch for any official response from the current U.S. administration, as it could escalate the situation. The upcoming quarterly earnings calls for both Nvidia and AMD will be critical, as management will be forced to provide clarity on their China sales forecasts. Any downward revision in guidance could trigger the next major leg down for these stocks.
