San Francisco – Even as Nvidia reported another blockbuster quarter of 69 per cent sales growth on May 28, the world’s biggest maker of artificial intelligence (AI) chips warned of more risks to its business emerging in the technology conflict between the United States and China.
Tucked into its quarterly filing, Nvidia for the first time said that restrictions on the use of open-source AI models from China such as DeepSeek and Qwen could hurt its business, as could US rules barring connected vehicle technology from China, where Nvidia’s long-struggling car chip business has finally flourished.
While Nvidia chief executive Jensen Huang on a conference call with analysts praised US President Donald Trump’s decision to rescind an export rule put in place by former president Joe Biden that would have regulated the flow of Nvidia’s chips around the world, the company’s filing noted that no new rule had been issued in its place and that a “replacement rule may impose new restrictions on our products or operations”.
Mr Huang also criticised new export curbs imposed by the Trump administration in April. The curbs stop the company from selling its H20 chip made for the Chinese market.
The export limits cost Nvidia US$2.5 billion (S$3.23 billion) in sales during its just-ended fiscal first quarter, and it expects another US$8 billion sales hit during the current fiscal second quarter. Sales of the H20 in China earned Nvidia US$4.6 billion in revenue as customers stockpiled the chips before the curbs set in. The China business accounted for 12.5 per cent of overall revenue.
“The question is not whether China will have AI – it already does. The question is whether one of the world’s largest AI markets will run on American platforms,” Mr Huang said, later adding that “AI export controls should strengthen US platforms, not drive half of the world’s AI talent to rivals”.
Mr Huang also argued that keeping Chinese open-source models such as DeepSeek and Qwen running on Nvidia chips provides the US with valuable insight on where the global AI industry is headed.
“US platforms must remain the preferred platform for open-source AI,” he said. “That means supporting collaboration with top developers globally, including in China. America wins when models like DeepSeek and Qwen run best on American infrastructure.”
Sales power on
Despite the curbs, Nvidia forecast sales of US$45 billion, plus or minus 2 per cent, in the second quarter, only slightly below analysts’ average estimate of $45.9 billion, according to data compiled by LSEG. That would imply growth of about 50 per cent from a year earlier.
Executives also highlighted deals worth potentially billions of dollars in the coming months and years in Saudi Arabia, the United Arab Emirates and Taiwan, sending Nvidia shares up after hours and leading analysts to conclude the impact of US-China trade tensions was not as bad as feared.
“Rather than downplay the China hit, (Mr Huang) contextualised it as a known, manageable speed bump in an otherwise hyper-accelerated growth narrative,” said Mr Michael Ashley Schulman, chief investment officer of Running Point Capital.
US-listed shares in Nvidia jumped almost 5 per cent in post-market trading on May 28 after the company delivered the solid revenue forecast.
In his praise for Mr Trump, Mr Huang highlighted the President’s deal-filled tour of the Middle East.
“President Trump wants US tech to lead,” Mr Huang said. “The deals he announced are wins for America, creating jobs, advancing infrastructure, generating tax revenue and reducing the US trade deficit.”
Mr Huang also said he agreed with a vision expressed by Cabinet officials such as Commerce Secretary Howard Lutnick of bringing factories back to the US and staffing them with robots.
“Future plants will be highly computerised in robotics. We share this vision,” he added. REUTERS
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