Nvidia’s financial results for the first quarter will be closely examined on May 28, 2025. Investors will assess the effects of US chip export restrictions to China.

The company previously announced a US$5.5 billion charge related to limits on its H20 chip. This chip is the only AI chip available for sale in the Chinese market, which represented 13% of its revenue last year.

CEO Jensen Huang reported that Nvidia lost US$15 billion in potential sales in China due to these restrictions. Analysts estimate that the limitations may have resulted in a revenue loss of up to US$1 billion during the final weeks of the April quarter.

Potential losses could reach US$4.5 billion per quarter for the remainder of the year.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Export controls prove counterproductive, accelerating China’s semiconductor self-sufficiency

US export restrictions on advanced chips to China have created a situation where attempts to restrict access have accelerated the development of the very capabilities they aimed to prevent.

Nvidia CEO Jensen Huang noted the company’s market share in China has plummeted from 95% to approximately 50% as a direct result of these controls, creating space for domestic competitors 1.

Industry experts at IEEE panels highlighted that China accounts for 40-50% of global semiconductor consumption, meaning US companies are potentially suffering more damage than their Chinese counterparts 2.

The restrictions have forced China to invest heavily in domestic semiconductor capabilities, with the unintended consequence of creating new competitors for US companies in what was previously a market dominated by American technology.

2️⃣ Nvidia’s dual strategy: compliance chips for China while pursuing Middle East expansion

Facing significant revenue losses from China restrictions, Nvidia is implementing a two-pronged approach to preserve its dominant market position.

The company is developing a new China-specific AI chip priced between $6,500-$8,000 – substantially cheaper than its premium offerings – using less advanced manufacturing techniques and traditional memory technologies to comply with export regulations 3.

This strategic pivot aims to maintain access to China’s estimated $50 billion data center market despite the $5.5 billion inventory write-off Nvidia has already taken due to restrictions 4.

Simultaneously, Nvidia is aggressively pursuing newly accessible markets, pledging thousands of cutting-edge Blackwell chips to Saudi Arabia as part of the easing of Biden-era restrictions.