Unable to properly split conditional types

[MOZGIII]

TypeScript 3.7.2
Playground link

Compiler Options:

{
  "compilerOptions": {
    "noImplicitAny": true,
    "strictNullChecks": true,
    "strictFunctionTypes": true,
    "strictPropertyInitialization": true,
    "strictBindCallApply": true,
    "noImplicitThis": true,
    "noImplicitReturns": true,
    "useDefineForClassFields": false,
    "alwaysStrict": true,
    "allowUnreachableCode": false,
    "allowUnusedLabels": false,
    "downlevelIteration": false,
    "noEmitHelpers": false,
    "noLib": false,
    "noStrictGenericChecks": false,
    "noUnusedLocals": false,
    "noUnusedParameters": false,
    "esModuleInterop": true,
    "preserveConstEnums": false,
    "removeComments": false,
    "skipLibCheck": false,
    "checkJs": false,
    "allowJs": false,
    "experimentalDecorators": false,
    "emitDecoratorMetadata": false,
    "target": "ES2017",
    "module": "ESNext"
  }
}

Input:

const nullAsUndefined = <T>(value: T): T extends null ? undefined : T =>
  value === null ? undefined : value;


console.log(nullAsUndefined(null));
console.log(nullAsUndefined(undefined));
console.log(nullAsUndefined(42));

Output:

"use strict";
const nullAsUndefined = (value) => value === null ? undefined : value;
console.log(nullAsUndefined(null));
console.log(nullAsUndefined(undefined));
console.log(nullAsUndefined(42));

Expected behavior:

There is a type error that I didn't expect.

On the function body:

Type 'T | undefined' is not assignable to type 'T extends null ? undefined : T'.
  Type 'undefined' is not assignable to type 'T extends null ? undefined : T'.(2322)

[nmain]

Duplicate of #33912

My search terms were "narrowing generic"

[jcalz]

Duplicate of #22735, related to #33912