Nvidia’s Sales in China Face Uncertainty
The U.S. government announced last year that Nvidia’s H200 AI chips would be sold to China, with companies already placing over 2 million orders by the end of December 2022. However, Nvidia only had 700,000 chips in stock, raising concerns about supply and financial implications, especially after the government mandated a 25% revenue cut from these sales.
Despite a robust demand highlighted by CEO Jensen Huang, the Chinese government has previously advised domestic companies against purchasing Nvidia’s products, focusing instead on supporting local chip development. This geopolitical tension, alongside indications that China may instruct companies to temporarily halt H200 chip purchases, adds risk to Nvidia’s valuation and future sales in the region.
Nvidia maintains a market cap of $4.5 trillion, with a growth rate exceeding 60% linked to AI advancements. However, analysts caution that as the company’s margins may decline due to government revenue cuts, and amid increasing competition from local manufacturers, Nvidia’s future profitability and share price could be affected.
