Nvidia denies reports of joint venture in China

Nvidia has denied reports claiming it plans to establish a joint venture in China.

A Taiwanese tech outlet, Digitimes, suggested the move to sustain its operations, but Nvidia called these claims “baseless” and criticized the publication for presenting speculation as fact.

This denial comes amid the ongoing US-China tech conflict.

Nvidia is facing US export restrictions on advanced GPUs while trying to maintain its presence in China, a market that generated US$17.1 billion in revenue last year.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ The costly cycle of compliance and restriction in tech export controls

Nvidia’s situation demonstrates how chipmakers face a perpetual cycle of adaptation and restriction in the US-China tech war.

The company specifically designed its H20 chip to comply with previous US export controls, only to have this modified version banned under tighter rules, resulting in a $5.5 billion financial hit 1.

This creates significant business uncertainty, as companies invest in developing compliant products with no guarantee that regulations won’t change again. Infrastructure Capital Advisors CEO Jay Hatfield described this as “inconsistent trade policy… costing companies a lot of money” 1.

The restrictions have led to alternative supply chains, with reports indicating chips are being smuggled into China from neighboring countries, showing how export controls may redirect rather than completely block access 2.

Despite the challenges, Nvidia had anticipated generating $12 billion in revenue from H20 AI chips sold in China in 2024 before the new restrictions 2, highlighting the substantial market opportunity now at risk.

2️⃣ The expanding economic impact of technological decoupling

The financial implications of US-China tech restrictions have grown dramatically, with Nvidia’s $5.5 billion inventory write-down representing just the beginning of potential losses.

JPMorgan analyst Harlan Sur projects a much larger impact, estimating Nvidia could lose $15-16 billion in revenue, representing 8-10% of its projected data center revenue for 2025 3.

China accounted for approximately 20-25% of Nvidia’s data center revenue 4 and generated $17 billion in total sales in fiscal year 2024, making it the company’s fourth-largest market 5.