Export Curbs Threaten Nvidia Growth in Key Markets
Nvidia has reported another quarter of strong financial performance, with sales jumping 69%. However, the company also cautioned about growing risks tied to US-China technology tensions. These concerns were outlined in Nvidia’s latest quarterly filing with US regulators.
For the first time, Nvidia flagged that restrictions on open-source Chinese AI models like DeepSeek and Qwen could impact its business. In addition, recent US rules blocking Chinese connected-vehicle technology could affect Nvidia’s automotive chip segment. That unit had only recently begun showing strong growth after years of underperformance.
CEO Jensen Huang, speaking with analysts, praised former US President Donald Trump for scrapping a Biden-era export regulation that had targeted Nvidia’s global chip sales. However, he noted that no new rule has yet been introduced to replace it. There’s a risk that any replacement may impose new limits on Nvidia’s products or operations.
H20 Chip Restrictions Weigh on Revenues
In April, the Trump administration implemented fresh export restrictions that banned Nvidia from selling its H20 chip in China. Huang criticised the move, describing the chip as a “springboard to global success.” The ban has already cost Nvidia $2.5 billion in its last fiscal quarter, and the company expects a further $8 billion impact in the current quarter.
Despite these losses, Nvidia recorded $4.6 billion in China H20 chip sales in the previous quarter, driven by customers stockpiling before the curbs took effect. China now accounts for 12.5% of Nvidia’s total revenue.
Huang stressed that restricting access to AI platforms in China will not stop the country’s progress in AI. Instead, he argued that US platforms must remain the top choice for developers worldwide, including those in China. He believes collaboration with top global developers using US infrastructure is crucial.
Political Scrutiny and Growth Prospects
Amid these developments, Nvidia is facing fresh political pressure. US Senators Jim Banks and Elizabeth Warren sent a letter raising national security concerns about Nvidia’s plan to lease a research facility in Shanghai. The company responded, saying it was merely expanding workspace for current staff, with no change in scope.
Despite regulatory hurdles, Nvidia’s stock rose 4% after a US trade court blocked most of Trump’s proposed tariffs. This gain could add around $130 billion to Nvidia’s market value, now nearing $3.3 trillion.
Looking ahead, Nvidia forecast second-quarter revenue of $45 billion, with a possible 2% fluctuation. This figure is just shy of analysts’ $45.90 billion estimate, representing a 50% increase from the previous year.
The company also highlighted potential multi-billion dollar deals in Saudi Arabia, the UAE, and Taiwan. Analysts believe these opportunities show the company is managing the US-China trade challenges better than expected.
Michael Ashley Schulman of Running Point Capital noted that Huang described the China export impact as a “manageable speed bump” amid Nvidia’s rapid expansion.
Huang also supported Trump’s Middle East diplomacy and US reshoring of manufacturing with robotic automation. “Future plants will be highly computerized in robotics. We share this vision,” Huang said.
with inputs from Reuters
