Nvidia, a global leader in AI and data center chips, has faced a shocking decline in China. Once dominating the market with a 95% share, the company now reports zero presence. CEO Jensen Huang recently addressed the issue, highlighting the role of U.S. export restrictions and its effect on the AI chip industry in China.
Why Nvidia Lost Its Market Share in China
During the Citadel Securities Future of Global Markets 2025 event, Huang stated:
“At the moment, we are 100% out of China. We went from 95% market share to 0%.”
China previously accounted for 20–25% of Nvidia’s data center revenue. However, U.S. export regulations since 2022 prevented the sale of Nvidia’s high-performance AI chips, including the A100, H100, and H200, to Chinese companies.
Nvidia’s Attempt to Re-Enter China
To regain its foothold, Nvidia developed the H20 chip, a downgraded version of its high-performance AI chips, specifically for the Chinese market.
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However, production was halted after a Chinese security investigation, discouraging local companies from adopting the H20. This opened the door for domestic companies such as Huawei, Alibaba, Tencent, and Baidu to accelerate the development of homegrown AI chips.
Financial Impact of the China Exit
Nvidia’s revenue from China has dropped significantly:
- From 21% to 12% over the past year
- Current quarter projections indicate no revenue from China
- Estimated loss: $2–5 billion in potential sales
Huang commented,
“I can’t imagine any policymaker thinking that’s a good idea—that whatever policy we implemented caused America to lose one of the largest markets in the world to zero.”
Implications for the Global AI Chip Industry
Nvidia’s exit demonstrates how geopolitical policies can directly affect the tech industry. While U.S. export restrictions aim to curb access to advanced AI technology, they also encourage the growth of domestic AI chip competitors in China.
The situation highlights a key trend: countries are increasingly investing in self-reliant AI infrastructure, reducing dependency on foreign technology.
Conclusion
Nvidia’s situation in China underscores the complex intersection of technology, geopolitics, and market strategy. While the company faces significant short-term losses, strategic adjustments and innovation will be crucial for regaining market presence and maintaining global leadership in AI chip technology.
