In a recent interview, Nvidia CEO Jensen Huang stated that the company will remove the Chinese market from future revenue forecasts due to U.S. government-imposed chip export bans. According to Mr. Huang, this will cost Nvidia $2.5 billion in revenue in the first quarter of fiscal 2025 and is expected to lose another $8 billion in the second quarter.
'We do not expect anything from the U.S. easing the ban,' Mr. Huang emphasized. 'If that happens, it would only be an unexpected bonus.' Nvidia's stock immediately reacted, dropping 1.43% on the day, trading around $142.92.
Trade policy goals are under suspicion
Mr. Huang did not hesitate to criticize the tariffs and restrictions imposed by the Trump administration, especially regarding the H20 chip – Nvidia's AI trump card. According to him, the bans did not achieve the expected results and even backfired. 'If you want long-term results, the policy needs to be clear and tested over time,' he stated at a conference in Taiwan.
The Chinese market, estimated to be worth $50 billion just for the data center segment, is currently almost closed to Nvidia. The company is still looking for ways to redesign its products to meet U.S. government regulatory requirements – a complex and risky step. Gil Luria, an analyst at D.A. Davidson, believes that without sales returning from China, Nvidia will face the risk of adjusting its revenue expectations for 2026.
The AI race: U.S. – China and Nvidia's intermediary role
The current context is not just a trade issue but part of the race for leadership in the global AI revolution. U.S. Vice President JD Vance warned at the AI Conference in Paris that excessive regulation could 'kill' the industry right from the start.
Dan Ives – Technology Research Director at Wedbush Securities – believes that China is in dire need of H20 chips to maintain its competitive position. Otherwise, Nvidia's market share there will fall into the hands of Huawei. 'Export restrictions not only hinder China but could also cause Nvidia to lose market share to domestic competitors,' Ives warned.
Michael Ashley Schulman, Investment Director at Running Point Capital, pointed out that 'zero-basing' the Chinese market – meaning not expecting any sales from there – allows Nvidia to eliminate a highly unstable variable from its business model. Any sales from China would be a 'positive surprise.'
Project in Europe: Leverage to escape dependency
Amid the uncertain Asian market, Nvidia is ramping up its expansion in Europe. The company just announced plans to build the first industrial AI cloud computing platform in Germany. This AI factory will utilize the latest Blackwell architecture, integrating up to 10,000 GPUs including the DGX B200 system and RTX Pro servers – asserting Nvidia's position as the AI powerhouse of the West.
On the U.S. government side, Kevin Hassett – Director of the National Economic Council – revealed in a discussion in London that Washington might consider easing restrictions on certain microchips used for industrial production, but high-end chips like H20 will still be strictly controlled.
Nvidia's future: Risks accompany opportunities
Nvidia's 'acceptance of losing China' is a proactive strategy to safeguard short-term stability. However, in the long term, if U.S.-China tensions do not ease, this is a game that the company must trade off. In the ever-accelerating world of AI, every policy decision is a double-edged sword – not only for countries but also for intermediaries like Nvidia.
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