BEIJING â Despite some U.S. government easing of restrictions, Nvidia, the prominent American chipmaker, is still working to recover its lost sales in China. The company is increasingly concerned about mounting competition from local Chinese firms. During a recent earnings call, Nvidia's CFO, Colette M. Kress, stated, "While small amounts of H200 semiconductor products for China-based customers were approved by the U.S. government, we have yet to generate any revenue," as noted in a FactSet transcript. She added, "We do not know whether any imports will be allowed into China." China was once responsible for over 20% of Nvidia's data center revenue.
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Previous U.S. export controls had compelled Nvidia to produce a less advanced chip, the H20, for the Chinese market. Nvidia had to halt these sales due to new regulations in April, but U.S. President Donald Trump permitted the sale of the advanced H200 chip to China in December, with the condition that the U.S. receive a 25% share of the sales. Still, sales have stagnated, amidst reported security reviews in both nations, despite Nvidia CEO Jensen Huangâs lobbying efforts in the U.S. capital and travel to China earlier this year.
Global AI Disruption
The semiconductor leader also cautioned investors about the growing challenge from China, the world's second-largest economy. Kress remarked, "Our competitors in China, bolstered by recent IPOs, are making progress and have the potential to disrupt the structure of the global AI industry over the long term." She also emphasized the importance of encouraging developers and businesses worldwide, including those in China, to adopt American technology.
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In recent months, a wave of Chinese AI chipmakers and large language model developers have gone public in Hong Kong and mainland China. Investor expectations for these firms as viable alternatives to U.S. AI technology have driven their stocks up shortly after their IPOs, although not all have maintained gains. OpenAIâs Sam Altman referred to the advances of Chinese technology companies across various sectors as "remarkable" in a CNBC interview on February 19. He noted that in some areas, Chinese tech is on the brink of innovation. Although Chinese AI firms slightly trail the U.S. in terms of capabilities, their products are generally less expensive than American counterparts. Rory Green, TS Lombardâs chief China economist and head of Asia research, remarked on CNBCâs "Squawk Box Europe" that "You could easily envision a scenario where maybe most of the world's population is running on a Chinese tech stack in five to ten years."