Trump's Tech War Could Cost Nvidia Billions—Here's Why

Nvidia Corp NVDA could be facing mounting pressure as President Donald Trump's administration is considering tightening technology export controls to China, threatening a revenue stream that accounts for roughly 15% of the chipmaker’s business.

The potential restrictions respond to recent advances by Chinese AI firms, particularly DeepSeek, whose latest models briefly wiped $600 billion from Nvidia’s market value earlier this year, the Economist reported last week.

Commerce Secretary Howard Lutnick signaled a hard-line stance on technology sales to China. During his confirmation hearing, Lutnick pointed to Nvidia’s chips being used by DeepSeek, saying “It’s got to end,” according to The Economist.

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The administration is weighing two options that could impact Nvidia’s business. Officials may further restrict sales of specialized AI chips to China, potentially including the H20, a scaled-down GPU Nvidia created for the Chinese market after previous export controls.

Dylan Patel, an expert in AI and semiconductor research at SemiAnalysis believes Nvidia has suspended H20 production in anticipation of new restrictions, despite manufacturing over 1 million units in the nine months leading to January, The Economist said.

The second approach involves enforcing the framework for AI Diffusion, a rule introduced in the final days of the Biden administration to prevent Chinese firms from accessing advanced GPUs through third countries.

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Nvidia called the rule “misguided” when announced. The company argues that imposing restrictions on over 150 countries risks alienating allies and potentially driving them toward Chinese alternatives like Huawei’s AI chips.

Despite the challenges, Nvidia CEO Jensen Huang met with Trump at the White House at the end January. While Huang reportedly lacks the close relationship with Trump that some tech leaders enjoy, he has connections through Elon Musk, whom he praised for building a data center for his GPU-intensive startup xAI.

Geopolitical tensions have already impacted Nvidia’s Chinese business, with sales to the region dropping from over 20% of total revenue two years ago. The Chinese government has launched an antitrust investigation into Nvidia, widely viewed as retaliation for U.S. export controls.

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Nvidia on Wednesday reported quarterly sales growing 78% year-over-year to $39 billion.

The company’s share price has largely recovered from its post-DeepSeek decline, suggesting investors believe the Chinese firm’s breakthrough might increase GPU demand by making AI more accessible.

In a note to clients earlier this week, analysts at TD Cowen highlighted that Microsoft MSFT canceled some data center leases in America, potentially signaling a slowdown in infrastructure spending, despite the tech giant’s insistence it remains committed to investing $80 billion in infrastructure this year.

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