Investor alert: Nvidia already in trouble, swamped by China's "all the above" strategy for chips

Published 2024-07-20
In 2022, investors raced into John Deere (DE) and Case New Holland (CNH), encouraged by the trendy investment theme of food scarcity, made much worse by the war in Ukraine and droughts in the US and Africa. The world would need huge volumes of new farm equipment to get us through the coming decades.

The fatal flaw of that thesis was that China had already developed a vast industrial sector that built low-cost, high quality farm equipment that would soon lead to soaring global food production and falling prices. As a result, Deere and CNH are now only competitive in the North American and European markets, where trade barriers have been erected to deny China's manufacturers access. Since those recommendations from sell-side Wall Street investment banks, Deere stock is back to where it was before the Ukraine war, and CNH shares are below prices of 2014.

The high-end semiconductor industry is attracting even greater interest from investors, who have made Nvidia a $3 trillion company. Here, too, China's massive capital investments and manpower advantages are already causing severe competitive problems for Nvidia. Huawei's chips are faster, more reliable, and are even priced more expensively than Nvidia's, while yet being less expensive to manufacture. Huawei, then, is enjoying far high profit margins than Nvidia in head-to-head sales.

However, Huawei and other Chinese tech companies are not allowed to sell high-end chips in the US market. Just as in the case of cars and agriculture equipment, Nvidia seems headed for a future similar to John Deere's present: competitive only in markets where Chinese have been closed off, and out of business everywhere else.

Resources and links:

Fewer and faster: Global fertility isn't just declining, it's collapsing
fasterplease.substack.com/p/fewer-and-faster-globa…

Barron's, Deere Is a Buy for 2022. It’s the ‘Tesla of Farming.’
www.barrons.com/articles/deere-stock-51644767351

Barron's, World Hunger Is on the Rise. These Companies Have Solutions.
www.barrons.com/articles/companies-solving-world-f…

Mordor Intelligence Industry Survey: China Agricultural Machine Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)
www.mordorintelligence.com/industry-reports/china-…

Huawei is quietly dominating China’s semiconductor supply chain
merics.org/en/report/huawei-quietly-dominating-chi…

China Unveils $48 Billion Fund to Bolster Chip Industry
www.morningstar.com/news/dow-jones/202405271617/ch…

Zerohedge, Nvidia Slashes AI Chip Prices As Huawei Launches China Discount War
www.zerohedge.com/markets/nvidia-slashes-ai-chip-p…

Reuters Exclusive: Nvidia cuts China prices in Huawei chip fight
www.reuters.com/technology/nvidia-cuts-china-price…

Deere's stock slides after agriculture equipment maker again lowers guidance
www.morningstar.com/news/marketwatch/20240516345/d…

Reuters, CNH Industrial cuts 2024 profit target as farm equipment demand slump
www.reuters.com/business/cnh-industrial-cuts-2024-…

FINAL TIER 4 ENGINES: A VISUAL GUIDE TO REGULATIONS
ckpower.com/visual-guide-to-regulations-for-final-…

SCMP, Chinese scientists find a way to mass-produce optical chips that the US cannot sanction
www.scmp.com/news/china/science/article/3262355/ch…

Fortune, China is poised to dominate the market for legacy chips, and the U.S. may only have itself to blame
fortune.com/asia/2024/07/05/china-poised-take-over…

Closing scene, Shenzhen, Guangdong

All Comments (21)
  • @dbestplanner
    America's fatal mistake was limiting sales of microchips to China. If china don't want to buy chips from American companies, then where will you sell them?
  • Esperen a que China se canse y cierre el mercado chino a todas esas empresas que se prestan para las sanciones a China y sus empresas llámese Nvidia Apple Google ASML y demás y cuando pierdan por completo el mercado chino es cuando empezarán a llorar
  • I am a farmer in Iowa. You have a great program. I ❤ how you explain how the US agricultural machinery manufacturers have walled off the industry. How can we have record world hunger and be told there is no demand for our commodities?
  • @J3unG
    Ooops. Long live China. They went back at the top after 150 years of humiliation. China will be top for 1000 years. Keep up the god work, Kevin. Watching from SF Bay Area, California.
  • @davidlazarus67
    Thailand has a growing indigenous agricultural drone industry. They are doing very well. Small farms don’t need big equipment and drones can apply fertiliser and pesticides very quickly and efficiently. Secondly John Deere equipment is very limited by subscriptions and unless you pay a steep subscription your equipment is useless. This is impacting farmers already.
  • @mrzack888
    China developing photon light graphics card faster than modern Nvidia GPU tech
  • ❤👍👍👍👍👍🙏😍🔥👏🙏Kevin’s message is so timely for people living in the USA. His framing of issues is very insightful in that China and US can find ways to work together to overcome the shortcomings of the relationships. It just requires a new way of thinking that Kevin tries to display. All the power to Kevin👍
  • @MASMIWA
    The photonic chips are particularly applicable to AI because their strength is in parallel processing which is the key function of AI chips from Nvidia, Huawei, etal. The US government is the biggest enemy to US semiconductor companies as the US government severely curtails sales of their most profitable chips to China.
  • @rolandwong9306
    After EVs, China will export farm equipment. Chinese tractors are gaining popularity in several European countries, with brands like Lovol making notable inroads: Ireland: Lovol tractors are being marketed as offering superior price-to-quality ratios compared to established European brands, which could disrupt the local market. Italy and UK: Chinese YTO Mini Farm Tractors are being exported to Italy, the UK, and other European markets. Germany: Chinese manufacturer Lovol showcased its tractors at the Agritechnica trade show in Germany, highlighting its new ownership under Weichai. Lovol is focused on updating its tractor models to meet European standards.
  • @davidlazarus67
    China has some excellent electric harvesters. There are many videos of them working as a cluster to harvest crops very fast. Being smaller they are easier to transport along small rural roads with several on a flat bed truck. Being that they have 5G connectivity they operate automously and are cheap to run. I think its a combination of farmers cooperatives and manufacturers that manage them.
  • @liamporter1137
    Yeah, China market is super competitive. This is why many foreign companies cannot make it in China.
  • @senti2175
    Just tell me when China is coming up with high end GPUs so we dont have to spend over $1000 just to play new games 🙏
  • @blue_eagle4989
    This one is more valuable than a wall street analysis report.
  • @SafepathUS
    Great informative video again Kevin, thanks 👍 Others deny my posts of China's rapidly improving technologies, so I share your videos to simplify for everyone. Much appreciated 🙏 Thanks for your other reminder, China's not our enemy, yet our own Washington and Wall Street greedy corporations agendas are. Our grandparents teachings proved to be best life long results as doing most things on the farm or home, saves time and money and saves many ways.
  • @tylert9875
    Cheap GPUs will be nice to have. Its practically criminal to hold these high performance GPUs from consumers. Whats going on 🤷
  • @mrzack888
    Jenseng knows, that's why he cashed out 30 billion dollars of his stocks
  • @ZIGZAG12345
    Bear in mind Europe seems to be doing a lot currently to discourage farming under the guise of "green regulations", the European market will not be as big anymore either...
  • @frankfranze5538
    We don't need industrial crops, we need real food like fruits and vegetables. Sustainable food
  • @skywire5595
    everything in China extremely competitive .
  • @Reutzel507
    We don’t really need more food. You need a new system.