CNBC
Nvidia's CEO, Jensen Huang, communicated that the company has "largely conceded" its position within China's artificial intelligence chip sector to Huawei amid ongoing U.S. export restrictions that have significantly impacted the global AI semiconductor industry.
Huang made these statements during the announcement of another remarkable quarter for Nvidia, wherein revenue experienced an 85% increase, rising to $81.62 billion from $44.06 billion the previous year. In addition, the company disclosed an ambitious $80 billion share buyback program and announced an increase in its dividend.
Nonetheless, China emerged as a primary area of concern.
"The demand in China is quite large," Huang remarked in an interview with CNBC's Sara Eisen. "Huawei is very, very strong. They had a record year, and they are likely to have an extraordinary year ahead, bolstered by a robust local ecosystem of chip manufacturers, especially since we've exited that market."
"We've really largely conceded that market to them," he further explained.
These comments highlight the extent to which the tightening export controls imposed by Washington on advanced AI chips have accelerated China's pursuit of semiconductor self-sufficiency.
Historically, the Chinese market represented at least one-fifth of Nvidia's data center revenue. However, following directives from the Trump administration in April requiring Nvidia to obtain a license for chip exports to China and several other nations, the company has been effectively barred from this critical market.
During his conversation with CNBC, Huang maintained a cautious outlook regarding the potential for any immediate reopening of the Chinese market, stating that Nvidia had advised investors to "expect nothing" with respect to obtaining approvals for the sale of advanced chips in the region.
"I don't have any expectation, which is the reason why we set all of our guidance, all of our numbers, all the expectations that I've communicated with our analysts and investors to invest nothing, to expect nothing," Huang stated.
Nevertheless, he indicated that Nvidia would be keen to re-enter the market should circumstances change.
"We would be more than delighted to serve the market," Huang expressed. "We have numerous customers and partners there, and our presence in China spans 30 years."
Huang also made a last-minute appearance at President Donald Trump's recent summit on China; however, this engagement did not clarify whether Nvidia's H200 chips would be allowed entry into the Chinese market.
Recent reports by Reuters indicated that some Chinese firms, including Alibaba, Tencent, ByteDance, and JD.com, have received U.S. Commerce Department approval to acquire H200 chips.
Nonetheless, a U.S. trade representative clarified that discussions surrounding chip export controls were not part of the recent talks, suggesting that meaningful relaxation of restrictions pertaining to H200 sales may remain a challenging aspiration.
Furthermore, Nvidia is ambitiously expanding its supply chain in preparation for what Huang described as a substantial growth opportunity inherent in the broader AI economy.
"The concept of a significantly larger company is not out of the question," Huang remarked, adding that Nvidia is making considerable investments across what he refers to as the AI industry's "five-layer cake," which includes energy, chips, infrastructure, models, and applications.
Huang noted that the company's foremost priority for its increasing cash reserves is to bolster suppliers amid escalating demand.
"As we accumulate hundreds of billions of dollars at once, we must support our supply chain to ensure they can sustain our growth," he concluded.
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