'There Is Only One China': Nvidia Chief Flags Dangers To US Chips Act, Repercussions Of US Tech Embargo On China

Nvidia Corp NVDA chief Jensen Huang warned against immense damage to U.S. tech from its semiconductor chip embargo with China.

Huang described how the sanctions have handicapped chipmakers like Nvidia from selling its advanced chips in one of the company's biggest and most important markets, Financial Times reports.

He also emphasized how Chinese companies built their chips to rival Nvidia's market-leading gaming, graphics, and artificial intelligence processors.

Also Read: Nvidia Reaches Workaround For Export Of Flagship Product To China, Wins Alibaba And Peer Cloud Units As Clients

Huang's comments followed China's ban on U.S. memory chipmaker Micron Technology, Inc's MU products from critical infrastructure, perceived as China's retaliation against Washington's embargo.

Huang warned U.S. lawmakers to be "thoughtful" about imposing further rules restricting trade with China. "If we are deprived of the Chinese market, we don't have a contingency for that. There is no other China, there is only one China," Huang said.

Huang believed the sanctions would "cut the Chips Act off at the knee," referring to the Biden administration's $52 billion semiconductor funding package.

While OpenAI's ChatGPT frenzy played a crucial role in more than doubling Nvidia's market capitalization in 2023, the restrictions on the chipmaker from selling its cutting-edge AI chips to China are hurting its potential.

Huang said China made up roughly 33.33% of the U.S. tech industry's market and would be impossible to replace as both a source of components and an end market for its products.

China, including Hong Kong, accounted for more than 20% of Nvidia's sales in its latest financial year ending January 2023, while Taiwan represented more than 25%. 

Taiwan manufactures most of the world's advanced chips, including Nvidia's, which Beijing claims is part of its territory. President Joe Biden has warned against U.S. intervention lest China unleash unprovoked military action against Taiwan. 

Huang also recalled his failed takeover of Softbank Group Corp SFTBF SFTBY Arm Ltd due to regulatory hurdles restricting its growth potential in the U.K.

Taiwan Semiconductor Manufacturing Company Ltd TSM retired founder Morris Chang had also flagged the repercussions of U.S. technology sanctions on China.

Price Action: NVDA shares traded lower by 0.89% at $304.15 premarket on the last check Wednesday.

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