Nvidia still hasn't sold its U.S.-approved China AI chips — and it’s worried local AI rivals could take over

In a significant development for the semiconductor industry, Nvidia, the renowned U.S. chip manufacturer, is grappling with sluggish sales in China. Despite the U.S. government easing some restrictions on chip exports, Nvidia has not yet seen a rebound in revenue from the Chinese market. During a recent earnings call, CFO Colette M. Kress expressed concerns regarding the company's current position. "While limited shipments of H200 semiconductor products for clients in China received U.S. approval, we haven't generated any revenue from these sales yet," she stated, highlighting the uncertainty surrounding future imports to China. Historically, China has been a crucial market for Nvidia, contributing at least 20% to its data center revenue. However, previous U.S. export controls compelled Nvidia to create a less powerful chip, known as the H20, for Chinese customers. Following a pause in sales last April, former President Donald Trump authorized the shipment of the more advanced H200 chip to China in December, contingent on the U.S. receiving a 25% share of the sales. Despite this authorization, Nvidia's sales efforts have stalled, compounded by heightened security scrutiny in both countries. Moreover, Nvidia is increasingly concerned about the burgeoning competition from Chinese technology firms. Kress noted, "Our rivals in China, supported by recent IPOs, are advancing rapidly and could potentially disrupt the global AI landscape in the long run." She urged U.S. officials to foster an environment where developers and businesses worldwide, including those in China, leverage American technology. The past few months have seen a surge of Chinese AI chipmakers and large language model developers going public, with many stocks, such as MiniMax and Moore Threads, seeing significant initial gains. OpenAI’s Sam Altman remarked on the impressive progress of Chinese tech firms, indicating that they are approaching the cutting edge in various sectors. While these companies may lag slightly behind the U.S. in terms of technological capabilities, their offerings are generally more affordable. Economic experts, like Rory Green from TS Lombard, suggest a future where a significant portion of the global population might rely on a Chinese tech ecosystem within the next decade.