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Jensen Huang, CEO of Nvidia. Photo: Bloomberg . |
In its Q1 2025 financial report, Nvidia sent a strong message to the administration of US President Donald Trump regarding regulations restricting the export of AI chips to China.
"China's AI industry will continue to grow regardless of whether it uses chips from the US or not," Nvidia CEO Jensen Huang stated.
Pointing out that more than half of the world's AI programmers are from China, Huang argued that preventing American companies from competing in the country of over a billion people could cause the US to lose its leading position in the AI race. Nvidia itself cannot abandon the Chinese market.
Significant impact on revenue.
"Ultimately, the platform that AI programmers trust and use will win the AI race. Export controls should be used to strengthen the US platform, not to 'hand over' half of the world's AI talent to a competitor," Huang emphasized.
According to the WSJ , financial reasons are also a key factor in Nvidia's strong stance. The US government 's decision in April to block the sale of H20 chips to China caused Nvidia's revenue to drop by approximately $2.5 billion in the most recent fiscal quarter (ending April), and is expected to lose another $8 billion in the next fiscal quarter (ending July).
The H20 chip was originally designed specifically for the Chinese market to comply with previous restrictions. If it cannot be sold in China, Nvidia will not be able to sell this chip in other markets either.
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Nvidia's total revenue and losses due to restrictions on selling H20 chips to China. Photo: WSJ . |
Demand for Nvidia's AI chips continues to boom in many countries, helping to offset some of the lost sales. Nvidia's market capitalization is currently around $3.3 trillion , three times that of the next largest chip company (Broadcom). This shows that investors still have faith in Nvidia's growth potential.
Wall Street analysts predict Nvidia's annual revenue will exceed $200 billion this year, reaching $300 billion by 2028. However, this is unlikely to happen without including China, the world's second-largest economy , which has high ambitions in the field of AI.
According to Morgan Stanley statistics, venture capital funds backed by the Chinese government invested $184 billion in AI startups between 2000 and 2023. Nvidia estimates that the AI accelerator market in China is worth approximately $50 billion .
“China accounts for a quarter of the market. That’s a huge number,” said analyst Tim Arcuri from UBS . He added that Nvidia would seize “dominance” if it could compete effectively in the country with the world’s largest population.
Competitive potential in China
Wall Street analysts still expect Nvidia to return to the Chinese market soon. “We believe that some business opportunities in China will recover,” said analyst Joe Moore from Morgan Stanley.
However, any changes at this stage would require the Trump administration to repeal or modify existing regulations. Based on recent developments, the WSJ believes this is unlikely to happen.
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Nvidia's market capitalization compared to its competitors in the chip sector. Photo: WSJ . |
Analyst Tim Arcuri suggests that modifications to allow Nvidia to sell more powerful chips in China are still possible, especially given that the US has restricted exports of advanced chip manufacturing equipment to China.
"If the equipment restrictions remain unchanged, China will still be subject to certain limitations on what it can do," Arcuri emphasized.
Nvidia's absence creates opportunities for domestic competitors like Huawei. According to Morgan Stanley's estimates, domestic companies currently meet about 34% of the demand for AI chips. This figure could reach 82% by 2027.
If Nvidia returns to China, it will still have to compete with domestic rivals, especially as the Chinese government promotes the use of domestic technology in key industries.
Nvidia is a global AI giant with a highly regarded ecosystem of chips, hardware, and software. The company can still compete well in China, but that depends on the White House.
Source: https://znews.vn/ly-do-nvidia-khong-the-tu-bo-trung-quoc-post1557960.html
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