Nvidia's AI Chip Dominance Faces Challenges in China Amid Push for Domestic Technology

Nvidia's China Chip Boom Faces Threat As Beijing Pushes For Homegrown AI - NVIDIA (NASDAQ:NVDA)

Nvidia NVDA has popularized the accelerators that China should ditch, a top government adviser warned, urging the country to develop domestic chips that enable artificial intelligence. Wei Shaojun, a professor at Tsinghua University, a longtime advocate of domestically produced chips, told a forum in Singapore that Asian nations risk becoming dependent on U.S. general-purpose graphics processing units, which now power platforms from ChatGPT to DeepSeek. Wei criticized the region for emulating American approaches to algorithms and large models, Bloomberg reported on Thursday. Also Read: Nvidia Launches New Chip To Boost AI Coding And Video Tools His comments come as Chinese firms struggle under years-long U.S. curbs that restrict access to Nvidia's cutting-edge AI chips, leaving domestic technology several years behind the global frontier. Chinese tech giants are intensifying efforts to win the global AI race, with DeepSeek and Meituan MPNGY emerging as two of the country's strongest contenders against OpenAI, Microsoft MSFT, Alibaba BABA, and Tencent TCEHY. DeepSeek is pushing an agent-focused AI model built to handle multi-step tasks autonomously, retain learning, and minimize user input. Founder Liang Wenfeng aims to launch commercially by year-end, following the R1 model's January debut that rivaled OpenAI at a fraction of the cost. Meituan is betting on open source. The company rolled out LongCat-Flash-Chat, a 560-billion-parameter Mixture-of-Experts model designed for faster, cheaper inference, directly challenging Alibaba Cloud's Qwen ecosystem. Beijing has also pushed local firms to avoid Nvidia's H20 processor -- a downgraded product tailored for the Chinese market under U.S. export rules. Wei urged China to build chips designed explicitly for large-model development rather than continuing to rely on GPU architectures intended initially for gaming and graphics. Nvidia's stock gained over 32% year-to-date, topping the NASDAQ Composite Index's 14% returns. The chip designer continues to generate massive revenue from China as Alibaba, ByteDance, and Tencent hoard its AI chips. Chinese firms ordered as many as one million H20 units -- worth more than $16 billion in a single quarter -- before fresh sanctions, with $17 billion of Nvidia's $18 billion H20 sales since 2025 tied to China. That equals 13% of its fiscal 2024 revenue. To resume H20 shipments, Nvidia agreed to remit 15% of its China chip revenue to the U.S. government. Even so, Bernstein expects its China market share to slip to 55% this year from 66% in 2024. Analysts see more upside ahead. Bank of America's Vivek Arya projects $6-$10 billion in potential China sales through January, though $3 billion-$4 billion could be delayed by supply constraints. CEO Jensen Huang has reassured Chinese buyers, calling China a $50 billion opportunity if Nvidia remains engaged in providing China with sanction-compliant offerings. NVDA Price Action: NVIDIA shares were up 0.46% at $178.14 at the time of publication on Thursday. The stock is approaching its 52-week high of $184.48, according to Benzinga Pro data. Read Next: Super Micro Teams With Nokia To Tackle Surging AI And Cloud Demand Photo: Shutterstock NVDANVIDIA Corp$177.480.08%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum87.58Growth97.83Quality93.46Value4.24Price TrendShortMediumLongOverviewBABAAlibaba Group Holding Ltd$155.347.93%MPNGYMeituan$25.12-1.80%MSFTMicrosoft Corp$502.570.44%TCEHYTencent Holdings Ltd$82.051.79%Market News and Data brought to you by Benzinga APIs

Why Nvidia's Growth Might Ramp Up Next Year | The Motley Fool

Nvidia sees a tremendous opportunity in China, potentially to sell its Blackwell chips there. Chipmaker Nvidia (NVDA 3.91%) has been generating monstrous growth in recent years. Its artificial intelligence (AI) chips have been a necessity for tech companies investing in AI and next-gen technologies. The company's brand has been synonymous with all things AI, given how integral its chips have been in the development of chatbots and other AI-related products and services. But the nagging concern is that the growth will dry up for Nvidia. Competition will intensify, and companies may cut back on spending, especially if the payoff isn't clear from the investments that they're making in AI. And in recent quarters, Nvidia's growth rate has indeed been slowing down. However, I think there's a good chance it may reverse the trend, and that next year, its growth rate may actually accelerate. Recently, trade conditions between China and the U.S. have been improving. And CEO Jensen Huang is hopeful that the company's cutting-edge Blackwell chip could soon be sold there, saying that it is a "real possibility." For now, it's the company's H20 chip, which is based on older technology, that is expected to be available to China, and even that involved negotiations between Huang and U.S. President Donald Trump. In exchange for selling the chip to Chinese customers, the tech company has agreed that 15% of those sales will go to the government. Due to the ambiguity and uncertainty around the Chinese market, Nvidia does not include H20 sales as part of its forecast. The company estimates it could sell billions of dollars worth of chips to China, especially if they are its newer Blackwell chips. Huang says China is a top market for AI, calling it a $50 billion opportunity for Nvidia just this year, and he's projecting it to grow by around 50% per year. If Nvidia can access the Chinese market next year and sell its latest chips, the growth it generates from there could more than make up for declining growth in North America and other markets, thus boosting its overall growth rate. In its most recent quarter, which ended on July 27, Nvidia's revenue totaled $46.7 billion, which represented a year-over-year increase of 56%. This was with the company saying it had no sales of its H20 chip to any Chinese-based customers. While its growth rate has been declining of late, that does come with an asterisk. The above chart may indicate a troubling trend, but when you consider that Nvidia has averaged such a ridiculously high rate of growth over the past couple of years, it's inevitable to see a bit of a slowdown; such an impressive performance isn't likely to be sustainable for long. But what's encouraging is that it's still above 50%, and that's without Nvidia being able to access one of the top AI markets in the world, in China. If Nvidia is able to sell its Blackwell chips to China, that could have a tremendous impact on both its top and bottom lines. It may seem tough to make a case that the most valuable company in the world, Nvidia, is still cheap. It has a market cap of more than $4 trillion. But there could be a compelling case to be made for it, given the potential for massive growth opportunities in the Chinese market. Nvidia trades at a price-to-earnings multiple of 48, but if its growth rate accelerates next year and the company is able to maintain high profit margins, that ratio could conceivably come down. And if it does, that could make it a much cheaper buy than it looks to be. Its price-to-earnings-growth (PEG) multiple of 1.25 also suggests that this isn't a terribly expensive stock to own, given the long-term growth prospects it possesses. As long as AI spending remains strong, there could still be much more upside ahead for investors who buy shares of Nvidia today, especially if the company is able to access a hot growth market such as China.