Nvidia CEO Jensen Huang Criticizes Chip Curbs That 'Shut Out' China
Despite Wall Street's positive reaction to Nvidia's quarterly earnings, CEO Jensen Huang stated that the business is missing out on billions of dollars in sales due to its inability to sell in China.
"The $50 billion China market is effectively closed to U.S. industry," Huang warned analysts at the start of his prepared remarks on the earnings call. "As a result, we are taking a multibillion-dollar write-off on inventory that cannot be sold or repurposed."
Even without access to the world's second-largest economy, Nvidia announced a 69% year-over-year revenue increase to $44 billion in the fiscal first quarter, exceeding analysts' expectations. The stock surged about 4% in extended trade, reaching its highest level since January if it remains there on Thursday.
Nvidia shares are now up for the year, following a rough start to 2025, adding to a rise that increased the company's market capitalization by about 240% in 2023 and more than 170% last year.
Nonetheless, Huang expresses his discontent with the situation in China.
In April, the Trump administration informed Nvidia that its previously approved H20 processor for China would require an export license, effectively ending sales with "no grace period," the company stated on Wednesday. The United States government has raised national security worries about Nvidia's powerful AI chips being sold to a major foe.
Nvidia developed the H20 after the Biden administration prohibited AI chip exports in 2022. It's a slowed-down version designed to comply with US export rules.
Nvidia said on Wednesday that if the business had been able to sell H20 processors for the entire quarter rather than stopping in April when it received the government notice, revenues would have been $2.5 billion higher. It had to write off $4.5 billion in inventory that it could no longer use.
In the current quarter, Nvidia reported that it had $8 billion in scheduled H20 orders that had to be canceled. Nvidia's projection for the current period is $45 billion, which would have been nearly 18% higher if not for the constraint.
According to Huang, export curbs damage not only Nvidia but the entire United States. He stated that China will "move on" regardless of whether Nvidia's chips are used and that Chinese AI researchers will instead use domestic processors and technology from businesses like Huawei.
"The U.S. has based its policy on the assumption that China cannot make AI chips," says Huang. "That assumption was always questionable, and now it's clearly wrong."
"The question is not whether China will have AI," Huang clarified. "It already does."
While Huang has become more vocal about his objections to the export restriction policy, he is careful not to attack President Donald Trump, who has a habit of making life tough for corporations and individuals who openly oppose him.
Huang hailed Trump for rescinding the proposed "AI diffusion" rule, which would have imposed AI chip limitations on most countries, and praised him for facilitating agreements with Saudi Arabia and the United Arab Emirates to develop enormous data centers in the Middle East. He stated that Nvidia was manufacturing its latest processors and systems in the United States, alluding to Trump's ambition to bring high-tech production domestically.
"We share this vision" of highly automated manufacturing with Trump, Huang explained.
However, Huang confessed that Nvidia does not have an alternative response to the China issue.
When questioned on Wednesday if the business is developing a new China-focused chip to sell in the region or if Nvidia expected any respite from the administration, Huang said there is no replacement product at the time and that the most recent US limits are "quite stringent."
"The president has a plan," Huang explained. "He has a vision, and I trust him."