As Nvidia fights to stay relevant in China, more than sales are at stake
Nvidia is walking a tightrope in China with export controls — balancing compliance, profits and staying competitive. During the chipmaker’s earnings call Wednesday evening, CEO Jensen Huang noted that revenue from China has dropped to half of pre-export control levels. To put that in perspective: We’re still talking about $17 billion, according to Nvidia’s annual report . That’s 13% of total revenue, which is significant if more U.S. export restrictions come into play soon. The export-compliant H20 chips have been Nvidia’s lifeline in China, generating an estimated $12 billion to $15 billion in 2024 and keeping the company relevant in that market for now. Chinese customers have been eagerly buying these chips, especially since DeepSeek started getting global attention. If these chips get banned, Nvidia could lose billions in annual revenue from China. Sure, their global dominance and new Blackwell line will cushion the blow, but the real question will be how China responds. Will they continue buying these “cut-down” export-compliant Nvidia chips, or will they double down on domestic alternatives? Huang warned that competition in China is growing, and for the second straight year, Nvidia listed Huawei as a competitor in its 10K filing with the Securities and Exchange Commission. NVDA YTD mountain Nvidia stock year to date. The silver lining? Nvidia’s stock price likely already factors in further export controls by the U.S. government. Shares were down more than 5% in trading Thursday afternoon, bringing year-to-date declines to nearly 8%. Mizuho’s Jordan Klein said shares have been “de-risked,” while Citi suggested that China restrictions, semiconductor tariffs and Nvidia’s gross margins might keep the stock range-bound for a while. What’s becoming clear is that this isn’t just about short-term revenue hits. It’s about Nvidia potentially losing its foothold in the world’s largest semiconductor market just as domestic competitors are gaining ground. The real long-term risk isn’t just losing today’s China revenue, but missing out on tomorrow’s growth story in a market that’s rapidly developing its own AI chip ecosystem.
