The CEO of Nvidia, Huang, calls the China AI market an opportunity of $ 50 billion

The agreement could shake up an export control system designed to maintain the advantage of the United States in strategic technologies. Managers such as the Treasury Secretary Scott Bessent already position the arrangement as a model for other companies hoping to sell a technology sensitive to China.

But during the call of NVIDIA’s profits on Wednesday, the financial director Colette Kress noted that although the United States government expressed a “expectation” that it would obtain 15% of H20 income from Nvidia, it “did not publish such a requirement”.

In a subsequent exchange file, NVIDIA warned that “any request for percentage of income by the USG could submit to us to a dispute, increase our costs and harm our competitive position and benefit competitors who are not subject to such arrangements.”

The American-Chinese Technological War throws a shadow on the otherwise booming business of Nvidia. The company has deleted sales in China from its forecasts, and its 10 Q deposit includes a warning litany on the regulatory control of Washington and Beijing.

And this is a concern for Nvidia and her access to the CEO Jensen Huang described Wednesday as an opportunity of $ 50 billion on the “second computer market in the world”. Nvidia’s tokens may be the best AI processors in the world – but Chinese competitors are catching up.

Nvidia said $ 46.7 billion in quarterly revenue, a leap of 56% year -old year, even though Nvidia revealed that he had not sent any H20S to Chinese customers in the last quarter. The quarterly profit also jumped 59% to $ 26.4 billion.

The company has planned $ 54 billion in revenue for the next quarter, which would represent a jump of more than 50% compared to the same period a year earlier.

Nvidia did not include possible H20 sales at China as part of its forecasts, citing “geopolitical problems”. However, in his remarks, Kress said that the company could see up to $ 5 billion in H20 income in the next quarter if the geopolitical problems were released. “Each license sale that we will benefit from the American economy,” she said.

Sales to customers who use China as a billing location fell to $ 2.8 billion, compared to $ 3.7 billion a year ago.

Customers’ income that invoicing in Singapore increased by 80% to $ 10.1 billion. In its action file, Nvidia said that the income reserved for Singapore involves products “almost always dispatched elsewhere” and added that 99% of its “income from the controlled data center” billed in Singapore came from American customers in the last quarter.

NVIDIA is forbidden to sell its main AI processors in China since 2022. Huang has been a long -standing critic of American export controls, complaining that they rather encourage the growth of national Chinese alternatives and freeze American markets on the market.

In April, Nvidia revealed that he would need a license to sell the H20 processor, his last attempt to make a processor in accordance with American law, to China. Then, at the end of July, the Trump administration reversed the course: as part of its trademark with China, the United States indicated that it could allow sales of H20 in China.

Share the crisis

Despite the leap of more than 50% of income, NVIDIA stocks dropped by 3.1% of prolonged exchanges, as income from the data center to $ 41 billion, have missed some of the analysts’ most optimistic estimates.

Asian technology has had a mixed reaction to Nvidia income. Taiwan Semiconductor Manufacturing Co. fell 2.5%. Foxconn, which does AI services, dropped 1.0%.

However, SK Hynix, a Korean supplier of wide -band memory in Nvidia, jumped 3.3%. Tokyo Electron, a large manufacturer of flea manufacturing equipment, increased by 1.9%.

Chinese technological companies have poorly performed. Alibaba plunged 4.4%, although the negative feeling could have been due to concerns concerning a fierce and costly struggle concerning the market share of food delivery with Meituan and JD.com. Baidu, another leading Chinese AI developer, dropped by 1.3%.

But the manufacturers of Chinese fleas, more and more considered as real competitors of the AI ​​chips of Nvidia – at least in China – performed well in trade on Thursday. Semiconductor Manufacturing International Corp., Chinese national champion champion Chipmaker, increased by 10.4%. Cambcon, another local flea manufacturer on the AI, jumped 15.7% and exceeded Kweichou Moutai as the most expensive stock in China.

Greater competition

In his action file, Nvidia gave another striking warning about her competitive position in China in the future. “We may be unable to create a competitive product for the Chinese data centers market that receives USG approval,” he warned. “In this case, we would actually be seized of competition on the computer market / calculation of the Chinese data center.”

NVIDIA products – including its “fourth best” H20 processor – are still ahead of what Chinese companies can produce. However, manufacturers of national fleas, such as Huawei and its Ascend chips, begin to catch up and, more importantly, could soon offer better products than Nvidia or its peers are allowed to sell in China.

Qilai Shen – Bloomberg via Getty Images

Beijing would be very happy for Chinese companies to buy local alternatives. Earlier this month, Bloomberg and the Financial time said Chinese officials pushed local businesses, in particular those affiliated with the government, to stop their NVIDIA flea purchases. Officials wondered if NVIDIA China fleas present a security risk, following American discussions on the inclusion of rear doors and killing switches in Nvidia products to fight against flea fruks.

Nvidia denies firmly, including such doors in its products, and Huang reiterated that Nvidia’s fries do not constitute a threat to Chinese national security.

In its action file, Nvidia stressed that China could exercise its own regulatory pressure on the company, highlighting an antitrust survey launched last year in its acquisition of Mellanox in 2020. (Beijing often used antitrust measures as a means of response against American export controls). Beijing officials also ask whether compliance with American export controls is discrimination against Chinese customers.

Opportunity of $ 50 billion in China

On Wednesday, Huang suggested that China could offer Nvidia an opportunity of $ 50 billion for the year, “if we could remedy it with competitive products.”

American technology actions have recovered since the Deepseek shock of January, but the Chinese Open Source of Companies like Alibaba, Moonshot AI, Z.AI and Deepseek continued to impress external observers. And that helped stimulate Chinese actions: the Hong Kong Hang Seng index is up more than 25% for the year, against 10% for the S&P 500.

The Chinese embrace of open source models also modifies how American developers are approaching AI. In recent weeks, Openai and Xai have published open source versions of their owner models; The CEO of Openai, Sam Altman, even stressed China as the reason for the return of his business to open source.

“The vast majority of the main open source markets are created in China, and it is therefore quite important, I think, so that American technological companies can attack this market,” said Huang on Wednesday. “The open source models that have come out of China are really excellent.”

Earlier this month, Trump suggested that it was open to Nvidia selling a version of its powerful blackwell processor on the Chinese market. The CEO, Jensen Huang, had previously confirmed that discussions took place, and during the Wednesday winning call, said: “The possibility for us to bring Blackwell to the Chinese market is a real possibility.

“We just have to continue to defend the sensitivity and importance of American technological companies to be able to lead and win the AI ​​race and help do American technology in the world standard,” said Huang.

Nvidia can have less time than Huang hopes. Last week, Deepseek unveiled V3.1, the latest version of its AI model – with a special feature that optimizes performance on Chinese manufacturing fleas.