Nvidia says it has ‘largely conceded’ China’s AI chip market to Huawei

Nvidia's CEO Jensen Huang has openly admitted that the company has "largely conceded" its position in China's artificial intelligence chip market to Huawei. This statement comes in the wake of ongoing U.S. export restrictions that have significantly altered the global landscape for AI semiconductors. During a recent earnings report, Nvidia celebrated a remarkable quarter, with a staggering 85% increase in revenue, climbing to $81.62 billion from $44.06 billion in the previous year. The company also announced an ambitious $80 billion share buyback initiative and a rise in its dividend payouts. Despite these positive developments, the situation in China remains a critical concern for Nvidia. Huang noted the substantial demand within China, highlighting Huawei's impressive performance. He remarked, "Huawei is very, very strong. They had a record year and are poised for another extraordinary year ahead, bolstered by a thriving local ecosystem of chip companies. We have effectively evacuated that market." The CEO's comments point to the impact of the U.S. government's tightening restrictions on advanced AI chip exports, which have accelerated China's efforts toward semiconductor self-sufficiency. Once a significant source of revenue for Nvidia, the Chinese market accounted for at least 20% of its data center earnings. However, a directive from the Trump administration in April forced Nvidia to seek licenses for exporting chips to China and several other nations, effectively sidelining the company from this lucrative market. In his interview with CNBC, Huang expressed skepticism regarding any immediate prospects for reopening the Chinese market. He advised investors to "expect nothing" in terms of approvals for selling advanced chips in China. "I don’t have any expectation, which is why we have told all our analysts and investors to plan for nothing," he stated. Nonetheless, Huang conveyed Nvidia's willingness to re-enter the market if circumstances change. "We would be more than delighted to serve the market. We have a lot of customers there, a lot of partners, and we've been active in China for 30 years,” he added. Huang recently participated in a summit on China with former President Trump, although the discussions did not provide clarity on the future of Nvidia's H200 chips in China. Reports indicate that some Chinese firms, including Alibaba, Tencent, ByteDance, and JD.com, have received U.S. Commerce Department approval to purchase these chips. However, a U.S. trade representative stated that chip export controls were not a topic of discussion during the summit, suggesting a significant easing of restrictions may still be far off. As Nvidia navigates these challenges, the company is aggressively expanding its supply chain to capitalize on what Huang describes as a massive growth opportunity linked to the broader AI economy. "The notion of becoming many times larger is not out of the question," he remarked, emphasizing the company's substantial investments across the various layers of the AI industry, from energy and chips to infrastructure, models, and applications. Huang also highlighted the importance of supporting suppliers amidst soaring demand, stating, "As we grow hundreds of billions of dollars at a time, we must ensure our supply chain can support our expansion."