If the US government maintains the prohibition on the sale of avant-garde chips for artificial intelligence (AI) to China, Nvidia stands to lose a staggering $15 billion in revenue this year. This information comes from a recent report on how the company, led by Jensen Huang , articulated the challenging market dynamics during his meeting with Donald Trump last week. The discussion appears to have had a positive outcome, as Nvidia is set to resume sales of its H20 GPU to Chinese clients soon.
In the last fiscal year, which concluded on January 26, 2025, China accounted for roughly 13% of Nvidia’s overall revenues, translating to about $17 billion . Notably, China ranks as the company’s third-largest market, just behind the United States and Taiwan . However, the sanctions imposed by the US government pose a significant threat to Nvidia’s operations within this crucial Asian market. Currently, the company is unable to sell its most advanced chips to Chinese clients.
Nvidia’s Determined Strategy for Survival in the Chinese Market
The initial reception of the H20 GPU by Chinese clients was overwhelmingly positive, even though the capabilities of this chip are relatively inferior compared to Nvidia’s more advanced offerings. Initially, the US Department of Commerce permitted the sale of these chips to China because they complied with the imposed restrictions. Despite its limitations, sales of the H20 GPU surged by 50% quarter-over-quarter following its introduction to the Chinese market in mid-2024.
<img alt="Quantum physics has radically changed our lives" width="375" height="142" src="https://i.blogs.es/43060d/tunelcuaantico-ap/375_142.jpeg"/>However, things took a turn for the worse for Nvidia in mid-April. The US Department of Commerce implemented new export restrictions that effectively halted the shipment of the H20 GPU to China. As a result, Nvidia’s stock plummeted, losing 6% in value, as the company missed commitments related to this particular GPU.
Nvidia successfully persuaded the Department of Commerce to review regulations, allowing sales of the H20 GPU in China once again.
Chinese customers who had initially ordered sizable quantities of the H20 GPU included major corporations such as Tencent , Alibaba , and Bytedance . Finally, as indicated in the introduction, Nvidia managed to convince the US Department of Commerce to reassess its regulations, now permitting the sale of the H20 GPU to China again. “The US government has assured us that licenses will be granted. We hope to begin deliveries soon,” stated a representative from Nvidia.
Moreover, in June, the Taiwan Semiconductor Manufacturing Company (TSMC) , the world’s largest chip manufacturer, commenced the production of a new GPU for Nvidia utilizing the latest Blackwell microarchitecture . This chip is expected to be crucial for Nvidia’s strategy to retain its dominance in the Chinese market . However, the company will still require approval from the US Department of Commerce before any shipments can be made to China.
Currently, we know that this upcoming AI chip will be less advanced than the H20 GPU, which is an expected development. Its price range is anticipated to be between $6,500 and $8,000 . While this appears steep for average users, it is considered moderate within the professional GPU market for AI applications. For context, the H20 GPU is priced between $10,000 and $12,000 , indicating Nvidia’s intention to remain competitive and discourage Chinese rivals like Huawei and Moore Threads from capturing significant market share.
Image | Nvidia
More information | Reuters
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