Could US trade curbs on China slow long-term growth for AI chip giants like Nvidia?

Dubai: Nvidia may be the crown jewel of the global AI boom, but its dominance is facing growing pressure from geopolitics and rising competition—especially in China, the world’s biggest chip market.

The US government’s ongoing export restrictions have effectively locked Nvidia out of China, forcing the chipmaker to shelve high-performance products like the H200. Even its modified, lower-grade H20 chip has now been banned under new rules, cutting Nvidia off from billions in potential revenue.

CEO Jensen Huang warned during the company’s recent earnings call that Nvidia expects to lose $8 billion in sales this quarter alone due to these restrictions. “You cannot underestimate the importance of the China market,” Huang stressed, calling it the “home of the world’s largest population of AI researchers.”

Despite the hit, Nvidia stunned Wall Street once again by reporting $44.1 billion in revenue, nearly $1 billion above expectations—even after a $2.5 billion charge related to unsold H20 chips.

“We don’t know how it does it, but it does it,” said Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank. “Nvidia continues to defy gravity… despite all the challenges the trade war throws its way.”

The company’s Blackwell AI chips alone brought in $3 billion more than expected.

A growing concern for Nvidia is Huawei’s rapid progress in AI chips. Huang admitted that the Chinese tech giant’s latest processors now rival the performance of Nvidia’s H200—until recently, a top-tier offering.

With Nvidia unable to ship newer chips to China and no replacement planned, Huawei’s momentum could shift market loyalty away from US suppliers. If Chinese firms grow confident in local alternatives, Nvidia’s long-term grip on AI hardware could weaken considerably.

Analysts warn that these restrictions are not just hurting Nvidia—they may also fracture the global AI ecosystem. As Chinese companies invest in homegrown chips and US firms pivot to alternative markets, a two-track system could emerge:

This divide could slow innovation and reduce collaboration between leading AI researchers worldwide.

While Nvidia’s financials remain strong, investor nerves are fraying. “Geopolitical shrapnel around tech supply chains can swiftly tear through momentum trades,” said Stephen Innes at SPI Asset Management, pointing to a recent market dip after reports of new US curbs on chip design software.

To adapt, Nvidia may focus more on emerging markets like India and the Middle East, accelerate software-based revenue streams, and lobby for regulatory clarity. But the company can’t ignore what’s happening in China.

“I want all of the world’s AI researchers and developers to be using American technology,” Huang said. That may be a harder goal to achieve if US policy continues to shut the door on its biggest audience.