Nvidia CEO Jensen Huang has sounded a stark warning that Chinese technology firms like Huawei are catching up quickly in the race to dominate artificial intelligence (AI) chips, largely due to the impact of US export restrictions that have locked American companies out of China — the world’s biggest chip market.

Speaking to Bloomberg Television after Nvidia’s latest earnings announcement, Huang highlighted how US-imposed curbs meant to stifle China’s AI progress may be backfiring, enabling local players like Huawei and Tencent to fill the vacuum and accelerate their own innovation.

Huawei Emerges as a Strong AI Competitor

Once a customer of Nvidia’s cutting-edge AI chips, Huawei Technologies Co. has been blacklisted by the US government and barred from accessing key American technology. But rather than stalling, the company has surged ahead.

Huang acknowledged that Huawei is now “quite formidable”. According to him, Huawei’s latest AI chip now rivals Nvidia’s H200 — one of its top-performing chips until recently. The pace of development is accelerating. Chinese firms are doubling or even quadrupling their capabilities every year, he warned.

Massive Sales Hit for Nvidia

The restrictions have had a staggering financial cost for Nvidia. The company estimates that it will lose out on $8 billion in sales this quarter alone due to the ban on exports to China. That’s a substantial chunk of revenue for a company already riding high on the global AI wave.

China is Nvidia’s largest chip market, and the inability to sell even downgraded chips like the H20 means no viable replacement is currently allowed under US law. Huang noted that further performance degradation is not feasible, and any future chip tailored for China would need special approval from Washington.

US Restrictions Fuel China’s AI Resilience

The original goal of US export restrictions was to keep advanced AI technology out of Chinese hands. However, Chinese companies are now finding effective alternatives internally. Major players like Tencent, who once relied heavily on Nvidia, have pivoted to local options because they can no longer count on US suppliers.

This shift has created an unexpected catalyst for China's AI sector, pushing it to become more self-reliant and competitive on the global stage. According to Huang, the gap between American and Chinese AI technology is closing, and fast.

The China Market: Too Big to Ignore

Despite rising tensions, Huang stressed the irreplaceable importance of the Chinese market, calling it “the home of the world’s largest population of AI researchers.” He wants global AI researchers and developers to continue relying on American technology, but admitted that current US policy may hinder that vision.

Huang said, “Irrespective of the near-term revenue success we have had, we can’t ignore the fact that the Chinese market is very important.”

Immigration and Talent Policy Also in Focus

The discussion also touched on US visa revocations for Chinese students, a move seen by some as part of the broader tech cold war. Huang, himself an immigrant from Taiwan, defended the value of global talent in US tech innovation.

“I believe the administration still feels very strongly about the incredible importance of immigration,” he said. “We would like the brightest to come here.”

Nvidia’s Balancing Act: Business vs Geopolitics

This episode places Nvidia in a tight geopolitical bind. On one hand, it’s a tech titan of the US AI boom, leading innovations globally. On the other, it’s being cut off from a critical market that helped build its dominance.

Huang’s direct appeal to Washington suggests that the current policy, while well-intended, might be undermining long-term US competitiveness in AI by inadvertently fostering China’s technological rise.

No Immediate Alternative to H20

With the H20 chip also restricted under new US rules, Nvidia finds itself with no product it can legally sell to Chinese customers. Huang confirmed there’s no downgraded chip in the pipeline yet, but if one is designed, it would still require special government clearance.

This creates a strategic disadvantage for Nvidia and gives its Chinese counterparts breathing room to catch up.

Broader Implications for Global AI Race

This situation underscores a larger truth: AI is no longer just a technological or commercial contest — it's a geopolitical battlefield. The interplay of innovation, policy, and international relations will determine who leads the next phase of the AI revolution.

If the US continues to block access while China ramps up investment and research, the balance of power in global AI could shift sooner than expected.

Conclusion: Time to Rethink Export Strategy?

Jensen Huang’s comments are not just a corporate grievance. They’re a strategic warning. The US must weigh the long-term consequences of restricting access to American AI technology if it wants to retain leadership in the global innovation ecosystem.

As the battle for AI dominance intensifies, companies like Nvidia will need clarity, flexibility, and consistent policy direction to thrive — and to ensure that America’s AI edge does not become China’s gain.

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