Nvidia concedes China AI chips to Huawei

Nvidia CEO Jensen Huang said on May 21 that the company has “largely conceded” China’s advanced artificial intelligence chip market to Huawei, a public acknowledgment of how U.S. export controls and Chinese domestic competition have reshaped one of the world’s biggest AI markets. Huang made the remark after Nvidia reported fiscal first-quarter revenue of $81.62 billion, up 85% from a year earlier, in results released on May 20. He told CNBC that China demand remained “quite large,” but said Nvidia had been pushed out of the market. He also said the company was telling investors to “expect nothing” on near-term approvals to sell advanced chips into China. ### What exactly did Huang say about Huawei? Jensen Huang told CNBC that “Huawei is very, very strong” and said the Chinese company had a “record year” and would “very likely, have an extraordinary year coming up.” He added that “their local ecosystem of chip companies are doing quite well, because we’ve evacuated that market.” Huang then said: “We’ve really largely conceded that market to them.” (cnbc.com) CNBC reported the comments came as Nvidia discussed its international chip strategy around its earnings release. Huang’s wording tied Nvidia’s reduced position in China directly to policy restrictions rather than to a retreat from AI chips more broadly. ### How much of Nvidia’s business did China used to represent? CNBC reported that China once accounted for at least one-fifth of Nvidia’s data center revenue. (cnbc.com) Huang also said demand in China remains substantial even after tighter U.S. restrictions. Nvidia’s latest quarter showed how much the company has grown elsewhere. The company posted $81.62 billion in revenue for fiscal first quarter 2027, ahead of analyst estimates of $78.86 billion, while adjusted earnings per share were $1.87 versus estimates of $1.76, CNBC reported. (cnbc.com) ### Which U.S. restrictions are blocking Nvidia in China? April was the key turning point in the latest round of restrictions. (cnbc.com) CNBC reported that the Trump administration told Nvidia in April that it would need a license to export chips to China and several other countries, a requirement that has effectively shut the company out of that market. (cnbc.com) Reuters reported on May 14 that the U.S. Commerce Department had approved around 10 Chinese companies, including Alibaba, Tencent, ByteDance and JD.com, to buy Nvidia’s H200 chips, with some distributors such as Lenovo and Foxconn also approved. But Reuters said no deliveries had been made. (cnbc.com) ### Why is Huawei the company at the center of this? Huawei is the company Huang identified by name as the main beneficiary of Nvidia’s reduced presence in China. CNBC said his remarks underscored how Washington’s tighter curbs on advanced AI chip exports have accelerated Beijing’s push for semiconductor self-sufficiency. Chinese companies have had a stronger incentive to build around domestic suppliers as access to Nvidia’s top chips became more uncertain. (usnews.com) Reuters, as cited by CNBC and other outlets, reported that even where H200 licenses were approved, shipments had not gone through. ### Is Nvidia saying it is giving up on China entirely? Huang said no such thing. (cnbc.com) He told CNBC that Nvidia would be “more than delighted to serve the market” if conditions changed, adding that the company has customers and partners in China and has operated there for 30 years. His more immediate message was that investors should not count on a reopening soon. (cnbc.com) Huang said Nvidia had set its guidance and expectations on the basis that investors should “expect nothing” regarding approvals for advanced chip sales into China. ### What comes next that investors can actually watch? May 20 is the date of Nvidia’s fiscal first-quarter 2027 results and accompanying guidance, which the company posted on its investor relations site. (cnbc.com) CNBC reported that Nvidia also announced an $80 billion share buyback program and raised its dividend alongside the quarter. The next concrete marker is Nvidia’s fiscal second-quarter performance against that guidance, while any change in U.S. licensing decisions for China-bound advanced chips would come through company disclosures, Commerce Department action or named customer approvals. (investor.nvidia.com)