Nvidia’s stock experienced a 2% decline shortly after the market opened on Wednesday, reacting to a report from the Financial Times indicating that Chinese authorities have instructed major tech companies within the country to refrain from using the company’s AI chips. This decision highlights Beijing’s ongoing efforts to reduce its dependency on U.S. semiconductor products, particularly in light of escalating competition in artificial intelligence with the United States, alongside a broader push for domestic chip production and technology.
Hedgeye Risk Management analyst Felix Wang elaborated on the implications of this development, noting it marks a significant pivot in China’s technology strategy. The Chinese internet regulator has reportedly advised companies to stop placing orders for Nvidia’s RTX Pro 6000D chips, which were specifically tailored for the Chinese market.
Despite the setback, Nvidia CEO Jensen Huang has emphasized the critical importance of the Chinese AI market, describing it as a rapidly expanding opportunity estimated to be worth $50 billion. Earlier this summer, Huang engaged with the Trump administration in discussions to lift a U.S. ban on exports of the company’s lower-power H20 chips to China. This negotiation was characterized by an unusual agreement in which Nvidia would share a portion of its revenue from those exports with the government.
Huang also mentioned that Nvidia is developing a less powerful variant of its Blackwell chips specifically for the Chinese market. However, during a media briefing in London, he expressed a nuanced perspective on the ongoing geopolitical tensions, stating, “I think that we could only be in service of a market if the country wants us to be.”
While acknowledging his disappointment with the current developments, Huang displayed an understanding of the broader geopolitical landscape, remarking on the larger agendas at play between China and the United States. He concluded with a message of patience, indicating that Nvidia is prepared to navigate the complexities of these evolving relations.
