Leveraging its first-mover advantage in the field of artificial intelligence (AI) chips, Nvidia (NVDA) continues to dominate the global market. Its designed graphics processing units (GPUs), due to their superior performance and continuous innovation, have become the preferred tool for global customers developing AI programs, driving the company’s performance to record highs repeatedly. In its most recent complete fiscal year, Nvidia’s revenue exceeded $215 billion.
However, geopolitical factors are impacting the tech giant’s business layout in the world’s second-largest economy. Citing security concerns, the United States has restricted exports of advanced AI chips to China since 2022. Although there has been a recent policy easing, the road to recovery for Nvidia in the Chinese market still faces uncertainties.
In its latest earnings report, Nvidia disclosed updates on its business in China. The United States has long been Nvidia’s largest market, but China has always been a significant source of revenue. Data shows that even in the fiscal year 2025, following the implementation of export controls, China still contributed 13% of the company’s revenue.
To cope with the 2022 export restrictions, Nvidia designed the H20 low-power chip specifically for the Chinese market to comply with regulations, while continuing to sell its more advanced H200 and Blackwell series systems in other markets. According to a CNBC report, Nvidia CEO Jensen Huang recently stated that the size of China’s AI chip market could potentially reach $50 billion annually.
However, a new round of restrictions early last year caused a setback for Nvidia. Unable to deliver H20 chips to its Chinese customers, the company recorded a $1 billion charge that quarter. Subsequently, Huang not only met with then-US President Donald Trump but also repeatedly emphasized the importance of resuming sales to China publicly.
A policy window emerged at the end of last year. The US ultimately approved Nvidia’s export of H200 chips to China, on the condition that the company return 25% of its local sales revenue to the US. This development once led investors to be optimistic about Nvidia’s return to China’s embrace.
However, during last week’s earnings call, Nvidia’s Chief Financial Officer, Colette Kress, revealed the latest situation: The US government has approved the provision of a “small number” of H200 products to Chinese customers, but no actual sales have occurred yet, and the company cannot determine whether these products will ultimately enter the Chinese market smoothly. She added that Nvidia is continuously communicating with both the US and Chinese governments on this issue.
It is worth noting that local Chinese competitors are growing rapidly. Kress pointed out: “Thanks to recent IPO fundraising, our competitors in China are making progress, which could potentially impact the global AI industry landscape in the long run.”
Nvidia’s overall performance remains robust. In the most recent quarter, the company’s revenue increased by 73% year-over-year to $68 billion, and net profit soared by 94% to $42 billion. This indicates that even while temporarily absent from the Chinese market, Nvidia’s growth momentum has not weakened.
