Nvidia 'disappointed' as China business falls flat amid geopolitical turmoil

Core Insights - Nvidia's China business has significantly declined in the third quarter due to ongoing trade tensions with the US, resulting in only $50 million in sales of its H20 chips designed for the Chinese market [1][2] Financial Performance - Overall revenue from China was $2.8 billion, representing 5% of Nvidia's total sales for the quarter, which is substantially lower than the $8.4 billion anticipated by Wall Street analysts [3] - In contrast, Nvidia reported $39.2 billion in revenue from the US and $13.8 billion from Taiwan during the same period [3] - The previous fiscal year saw Nvidia's China business contributing 13% to its overall revenue [3] Geopolitical Challenges - The lack of sizable purchase orders in the quarter was attributed to geopolitical issues and increased competition in the Chinese market [2] - Nvidia's ability to ship competitive data center products to China has been hindered, but the company remains committed to engaging with both US and Chinese governments [4] Regulatory Environment - Nvidia faced a ban on selling H20 chips to China in April, which resulted in a $2.5 billion loss in revenue during the first quarter [5] - An agreement was reached in August allowing Nvidia to export H20 chips to China, but it required the company to share 15% of its China revenues [5] - Chinese regulators subsequently prohibited local tech firms from purchasing H20 chips, further complicating Nvidia's market position [5] Competitive Landscape - Chinese competitors such as Huawei and Alibaba have launched new AI chips, intensifying the competition against Nvidia in the market [6] Trade Relations - The US initiated a trade war with China by imposing tariffs exceeding 130% on imports in April, leading to ongoing retaliatory measures [7] - Nvidia has been a focal point in high-stakes trade discussions between US and Chinese leadership, with potential discussions about Nvidia's Blackwell chips, although hopes for selling these chips to China have diminished [7]