NVIDIA and the Trade War Between the USA and China
NVIDIA, a leading company in graphics processors and artificial intelligence (AI), is at the center of the trade conflict between the USA and China. This conflict has significant impacts on NVIDIA’s business, particularly due to export restrictions and dependence on the Chinese market.
Dependence on the Chinese Market
- Revenue Share in China: In the fiscal year 2025, sales in China accounted for about 13% of NVIDIA’s total revenue, amounting to around 17 billion USD. This shows that China is an important market for NVIDIA.
- Market Share: NVIDIA’s market share for graphics processors in China has fallen from 95% in 2022 to 50%, primarily due to tightened export regulations.
Effects of Export Restrictions
- Export Controls: The US export controls on AI chips, which NVIDIA CEO Jensen Huang described as a “failure,” have severely restricted the sale of high-quality GPUs like the A100 and H100 to China.
- Losses: Huang has estimated the potential loss of the Chinese market at 50 billion USD, equivalent to Boeing’s entire market value. This underscores the critical dependence on China for NVIDIA’s future development.
AI Success Without China
- AI Boom: Despite the boom in the AI industry, it is challenging for NVIDIA to be successful long-term without the Chinese market. China is a key market for AI applications and developments.
- Competition: The gap that NVIDIA would leave in the Chinese market could quickly be filled by competitors like Huawei, which could further pressure NVIDIA.
Future Prospects
- Diversification: To reduce dependence on China, NVIDIA could seek to diversify its business into other regions and tap into new markets.
- Technological Leadership: NVIDIA must leverage its technological leadership in the AI sector to break away from dependence on individual markets and strengthen its position in the global technology market.
Overall, dependence on China is a critical factor for NVIDIA that affects both the company and investors. The trade war between the USA and China exacerbates this challenge and requires NVIDIA to make strategic adjustments to remain successful in the long term.