China is making significant tech strides despite tariffs and export controls. Its tech stocks have outperformed the Nasdaq-100, helped by positive sentiment around DeepSeek, while Nvidia’s downgraded GPU offerings for China have spurred growth in a domestic market. Additionally, reports suggest that Baidu and Moore Threads are integrating DeepSeek with their GPUs, potentially benefiting UK-based Imagination Technologies amid the AI boom.
Despite ongoing tariffs, export controls, and general bad press, China seems to be hitting target after target, techwise.
First there is the news that Chinese tech stocks on the Hang Seng China Enterprises Index (^HSCE) in Hong Kong have outperformed the Nasdaq-100 so far this year.
Part of that might be the general positive sentiment following the DeepSeek launch in January. We think DeepSeek is interesting, but the market overreacted, and sales of high-end AI chips from Western suppliers will be ultimately unaffected—more performance has always been, and always will be, desirable.
From a GPU point of view, Nvidia continues to sell plenty of products in China, partly by tailoring its products to comply with export controls. However, the limitations on GPU capability have pushed the growth of the Chinese homegrown GPU market. We don’t believe much is being sold, but the groundwork is there for the future.
Although developed on a few thousand performance-capped Chinese-market Nvidia H800s, DeepSeek R1 is reportedly now running inferencing on Huawei’s Ascend 910C AI chips.
And now we have reports via Wccf tech that Chinese GPU developers Baidu and Moore Threads are running DeepSeek on their GPU offerings. Although the IP company is reticent about naming all of its Chinese customers, we believe both Baidu and Moore Threads work with UK-based GPU IP supplier-based Imagination Technologies, which, according to Bloomberg, is up for sale, potentially seeking to capitalize on the AI/GPU boom. If that is the case, then this moment of intersection with the DeepSeek zeitgeist will no doubt be good for Imagination’s value and sale prospects.
Another company Imagination works with within China is Innosilicon, whose Fantasy II board delivers what we estimate to be around 40 TOPS of AI performance, similar to an Nvidia RTX 3070. So, the AIB should be capable of running the distilled local AI models of DeepSeek.
Deep Seek can run on hardware developed in China, including high- to low-end AIBs.
Recently, Imagination CRO Jake Kochnowicz told us: “Geographically, I would say we’re still fairly evenly split across the world. It is pretty equitable between what we would consider the three main geos: US, China, and then everything else.”
That may be so, but DeepSeek gives imagination a new surge in life in China.
For more information on Imagination and China, see our previous story.
One side thought. If the Nvidia AIBs being sold to China are slightly derated, and assuming the Chinese are not overclocking them to get them up to full spec, could that represent more sales for Nvidia as the Chinese data centers use more of the AIBs to obtain the same level of performance? Just a speculation….
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