In a cautious assessment of its business in China, Nvidia executives warned during the company’s quarterly earnings call Wednesday that the ongoing U.S.-China trade conflict is hurting its revenue, with tariffs and export controls adding significant uncertainty to its outlook.
CEO Jensen Huang highlighted that Nvidia’s sales in China have been slashed by half since the United States imposed export controls on the company’s chips destined for the Chinese market. Currently, China accounts for about 15% of Nvidia’s total revenue. Huang’s comments come as the company grapples with the far-reaching impact of geopolitical tensions on its bottom line.
Nvidia’s Chief Financial Officer Colette Kress added that the company is closely monitoring U.S. President Donald Trump’s stance on China, particularly regarding tariffs, which she described as an “unknown” that could further affect the company’s prospects. “It’s an unknown until we understand further what the U.S. government’s plan is, both its timing, where, and how much,” Kress said, indicating that Nvidia is waiting for more clarity on the situation.
Kress noted that without any changes to the regulatory landscape, Nvidia expects its shipments to China to remain at their current levels. However, she also acknowledged that future earnings from the region are uncertain as geopolitical tensions continue to unfold.
In a post-earnings interview with CNBC, Huang discussed the challenges posed by China’s fierce competition, particularly from Chinese tech giants like Huawei. While it remains unclear whether the export controls are fully effective, Huang emphasized that Chinese companies are formidable rivals in the tech space.
This statement comes amid reports that the Trump administration is considering further tightening restrictions on chip exports to China. Earlier this week, U.S. officials reportedly pressured allied countries to enhance their own restrictions on China’s chip industry, which the Biden administration has already sought to curtail. The administration is working to prevent China from advancing its semiconductor capabilities, which could potentially benefit the country’s military development.
The Trump administration has also indicated that it may take steps to expand tariffs on chips, with President Trump suggesting in a meeting that “eventually we’re going to put tariffs on chips.”
Meanwhile, Nvidia’s H20 chips, designed specifically for the Chinese market, have seen increased demand following the rise of DeepSeek, an open-source AI model that took markets by surprise last month. Huang visited the White House in late January to discuss “strengthening U.S. technology and AI leadership,” though it remains uncertain whether additional chip export bans will be imposed on China. Following the meeting, Trump declined to specify whether he would extend such restrictions but hinted at escalating tariffs.
Despite these challenges, Nvidia reported strong fourth-quarter earnings, surpassing analyst expectations with a total revenue of $39.3 billion, above the projected $38.3 billion. Its data center unit, a major driver of Nvidia’s growth, generated $35.6 billion, surpassing the combined revenue of competitors Intel and Advanced Micro Devices.
Analyst Dan Ives of Wedbush Securities expressed confidence in Nvidia’s performance, saying that the company’s results indicate strong ongoing demand for its chips, even amid concerns over the rapid development of DeepSeek. Ives and his team believe that despite the uncertainty surrounding U.S.-China relations, the impact on Nvidia’s business will be manageable.
“Our view is ultimately the bark will be worse than the bite with China tariffs/export controls,” Ives wrote in a Thursday note. “This is all a game of high stakes poker to drive a deal with China at the negotiating table sometime in 2025.”