Nvidia shares fall over 5% on China market uncertainty

Nvidia’s stock fell more than 5% in after-hours trading August 28, 2025 after the company warned of challenges in China, despite posting strong quarterly results.

The US chipmaker’s shares closed flat at US$181.6 but slid to US$172.45 after reporting revenue of US$46.7 billion for the quarter ended July 27, up 56% year-on-year.

Revenue from China, including Hong Kong, dropped 24% to US$2.8 billion.

Nvidia also reported no sales of its H20 chips—designed for China under US export rules—compared with US$4.6 billion in the previous quarter.

The company is under pressure from both US and Chinese regulators.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Trade tensions are accelerating China’s semiconductor market bifurcation

The US-China tech rivalry is creating two distinct semiconductor ecosystems, with Nvidia caught between massive opportunity and growing restrictions.

Nvidia’s CEO acknowledged China represents a $50 billion market opportunity with half the world’s AI researchers, yet the company simultaneously warned that Chinese government policies “encourage customers to purchase from our China-based competitors” 1.

This bifurcation is already showing tangible results. China’s semiconductor index hit record highs this year, gaining 32% since January as Beijing promotes domestic alternatives through policy support 1.

The dynamics extend beyond just market access to supply chain control, as China produces 94% of the world’s gallium and 60% of germanium, critical materials for semiconductor manufacturing that Beijing has restricted exports of in retaliation for US tech controls 2.

This creates a strategic vulnerability for global semiconductor companies like Nvidia, which must navigate between maintaining access to China’s vast market while complying with US export restrictions.

2️⃣ Massive percentage growth can mask limited competitive scale

Cambricon’s headline-grabbing 4,348% revenue surge illustrates how dramatic percentage increases can obscure the actual competitive landscape in established industries 1.

Despite this explosive growth, Cambricon’s first-half revenue of $403 million remains dwarfed by Nvidia’s $44 billion in the same quarter, highlighting the vast scale difference between challengers and incumbents 3.