Nvidia Chief: US Chip Controls Hurt Nvidia

Nvidia CEO Criticizes US Chip Export Controls

Nvidia CEO Jensen Huang has criticized US chip export controls, stating they have strengthened Chinese tech companies while hurting Nvidia's market share in China. According to Huang, Washington's regulations, driven by economic and security concerns, have inadvertently accelerated the development of Chinese competitors like Huawei.

Speaking at a news conference in Taipei, Huang explained that the export controls on chips caused Nvidia to lose its leading position in China. Huawei, a Chinese telecommunications company, has been filling that gap, supported by the Chinese government.

Impact on Nvidia's Business

Huang stated that Washington’s actions gave Chinese companies "the spirit, the energy, and the government support to accelerate their development." He added, "All in all, the export control was a failure." Beginning in 2022, the US government under President Joe Biden put rules in place to limit the export of Nvidia’s most powerful chips to China.

Nvidia responded by modifying a chip to meet the government’s performance requirements. However, last month, Nvidia revealed that US officials now require a license for future sales of these chips to China, which is expected to cost the company $5.5 billion on inventory it had planned to sell.

Huawei's Role in China's AI Market

While Huawei’s chips are not as capable as Nvidia’s, they are sufficient for Chinese companies to offer AI services. The government in Beijing has been encouraging companies to use mostly Chinese-made chips in their data centers. Huang stated that AI researchers in China will use their own chips if they cannot get enough from Nvidia.

Nvidia's Commitment to China

Despite the challenges, Huang has pledged that Nvidia will continue to sell AI chips in China. He met with economic and trade officials in Beijing the day after the US government started an investigation into whether Nvidia’s previous sales to China violated US rules. Nvidia is concerned that any advantage Huawei gains in China could help it compete in other markets.

Financial Impact

Washington’s controls on chip exports have made it harder for Nvidia to do business in China. According to Bernstein Research, China accounted for $17 billion of Nvidia’s revenue during its last fiscal year, which is the lowest percentage in over a decade. Nvidia reported $130 billion in global revenue during its last fiscal year, a 114% increase from the previous year.

Huang said that Nvidia’s market share in China was nearly 95% four years ago but is now 50%. This month, the US Commerce Department stated that anyone using Huawei AI chips could be violating US export controls.

Comparison with Trump Administration

Countries have been buying Nvidia chips, and the Trump administration acted as a deal broker. Huang was in the Persian Gulf region during President Donald Trump’s visit, where deals were made to sell advanced chips from Nvidia to Saudi Arabia and the United Arab Emirates. US officials believe these deals will help American AI companies and strengthen the nation’s lead in AI.

Huang criticized the Biden administration’s approach. He noted that President Trump publicly wanted Nvidia to sell as many GPUs as possible globally. He emphasized the importance of China’s AI developers using Nvidia systems "or at least on American technology."