NVIDIA Surpasses $12B in China AI Chip Sales

Despite regulatory challenges impacting NVIDIA's operations in China, one of the world's largest semiconductor markets, the company anticipates selling AI chips valued at $12 billion in the region this year.

Analysts project NVIDIA will deliver over 1 million of its new H20 chips in the coming months, designed to circumvent current US export controls. Priced between $12,000 and $13,000 each, these chips indicate potential sales surpassing $12 billion, exceeding NVIDIA's total revenue of $10.3 billion from its entire Chinese operations in the fiscal year ending January 2024.

Since US restrictions began in 2022, NVIDIA has warned of operational impacts as Chinese cloud providers and AI startups explore local alternatives.

NVIDIA CEO Jensen Huang noted during the company's recent earnings call in May, "Our business in China faces challenges due to technology restrictions, yet we remain committed to serving our Chinese customers."

NVIDIA CFO Colette Kress reported a notable revenue decline in its Chinese data center division, including AI chips, in the latest quarter compared to previous periods.

Despite lower performance than US-sold chips, analysts from Morgan Stanley and SemiAnalysis report strong demand for NVIDIA's H20 chips among Chinese customers.

In the most recent quarter ending April, NVIDIA's Chinese market represented approximately 9% of its global revenue, down from 22% a year earlier. However, revenue from China still grew by over 50% year-on-year, totaling $2.5 billion.