Charles Esther
Tech giant Jensen Huang has openly condemned the US government’s export controls on advanced chips to China, highlighting how these restrictions have negatively affected Nvidia’s market share in the country.
Speaking at the Computex Taipei tech conference in Taiwan, Huang detailed the challenges his company faces amid tightening US policies.
Nvidia’s Market Share Declines Sharply in China
Huang revealed that Nvidia’s share of the Chinese chip market has dropped from 95% four years ago to just 50% today.
He attributed this decline largely to US export controls implemented since 2022, designed to restrict China’s access to high-tech semiconductors.
Export Controls Boost Chinese Tech Development, Says Huang
Contrary to the intended effect, Huang stated the restrictions have spurred growth among Chinese tech firms.
He explained that the export controls provided Chinese companies with motivation, government backing, and resources to accelerate their own chip development efforts.
Huang called the US policy “a failure” because it has strengthened rather than weakened China’s semiconductor industry.
Financial Impact and Previous Statements on Export Controls
Nvidia reported that new rules tightened under the Trump administration and continued by the Biden administration effectively banned some of its latest chip products, like the H20 GPU.
This shift is expected to cost Nvidia approximately $5.5 billion in the first quarter earnings due to lost sales.
About 13% of Nvidia’s revenue in the latest fiscal year came from China and Hong Kong, down from 17% the prior year.
Earlier in February, Huang had expressed uncertainty over the effectiveness of export controls in an interview with CNBC.
Importance of China’s AI Research Community
Despite the challenges, Huang praised the vibrant AI research environment in China, noting that half of the world’s AI researchers are based there.
He emphasized Nvidia’s goal of supporting AI innovation globally, highlighting Chinese startup DeepSeek as an example of companies building on Nvidia’s technology.
Competition Remains Fierce, and the US Has No AI Monopoly
Huang acknowledged the intense competition Nvidia faces in China, particularly from formidable companies like Huawei that develop their own chips.
He insisted that US export bans, including those on Nvidia’s H20 chip, are ineffective because of China’s abundant power resources and land for data centers.
Huang also noted there is no feasible way for Nvidia to further degrade its chip architecture to comply with export rules without losing customer interest.
Stock Market Reaction and Investor Sentiment
Nvidia’s stock has experienced volatility, influenced by broader tech sell-offs and uncertainty around export policies.
While the stock has gained nearly 41% over the past year, it has remained mostly flat in 2024 so far.
Conclusion
Jensen Huang’s comments underscore the unintended consequences of US export controls, which have accelerated Chinese tech development and impacted Nvidia’s business in one of its key markets.
As China continues to invest heavily in semiconductor innovation, the global chip landscape may see significant shifts despite ongoing trade restrictions.
