Shares of Nvidia (NVDA) experienced a 2% decline shortly after the market opened on Wednesday, prompted by a report from the Financial Times indicating that Chinese authorities have instructed major tech firms in the country to refrain from using Nvidia’s artificial intelligence chips. This directive illustrates China’s strategic initiative to reduce dependency on U.S. semiconductor technology amid escalating competition in the AI sector and to foster the development of domestic chip production and tools.
Hedgeye Risk Management analyst Felix Wang emphasized in a recent note that this decision reflects Beijing’s broader agenda to limit reliance on foreign technology amidst rising tensions with the U.S. Reports suggest that China’s internet regulator has specifically told companies to halt orders for Nvidia’s RTX Pro 6000D, which was tailored for the Chinese market.
Nvidia’s chief executive, Jensen Huang, has consistently highlighted the significance of the Chinese AI market, projecting it as a rapidly expanding opportunity worth approximately $50 billion. Earlier this summer, Huang actively lobbied the Trump administration to lift restrictions on the export of Nvidia’s lower-power H20 chips to China. This unprecedented arrangement involved Nvidia agreeing to share a portion of its revenues from these sales with the U.S. government. Furthermore, Huang mentioned that the company is developing a less powerful variant of its Blackwell chips specifically for Chinese consumers.
During a media briefing in London on Wednesday, Huang expressed his discontent regarding the recent developments. He acknowledged the complexities of the evolving relationship between the United States and China, stating, “I think that we could only be in service of a market if the country wants us to be.” He added, “I’m disappointed with what I see, but they have larger agendas to work out, you know, between China and the United States, and I’m understanding of that, and we’re patient about it.”
The unfolding situation raises questions about the future of Nvidia’s operations in China and the broader implications for U.S.-China relations in the technology sector.
