Home / Business and Economy / Nvidia Caught in US-China Chip Trade Crossfire
Nvidia Caught in US-China Chip Trade Crossfire
26 Aug
Summary
- Nvidia's China business under scrutiny after deal with Trump administration
- Beijing urges domestic firms to limit Nvidia chip purchases over security concerns
- Nvidia developing new chip for China to bypass import restrictions
As of August 26th, 2025, Nvidia's business in China has become the center of attention for investors as the AI chipmaker prepares to report its earnings. Caught in the crossfire of the ongoing trade war between the United States and China, Nvidia's fate in the Chinese market now depends on the outcome of tariff talks and chip trade curbs between the world's two largest economies.
In a recent and unusual move, Nvidia agreed to pay the U.S. federal government 15% of the sales it made in China in exchange for export licenses. This decision has drawn bipartisan criticism. Meanwhile, Beijing, despite a huge appetite for Nvidia's chips in China, has urged domestic companies to limit their purchases over apparent security concerns.
Reports have emerged that Nvidia has told some suppliers to suspend production of its China-specific H20 chips. However, the company is also developing a new and more powerful chip for the Chinese market, indicating its efforts to navigate the complex geopolitical landscape.
"We've got to get clarity on these two governments first, whether China wants the chips and whether the administration is going to allow it," said Jamie Meyers, a senior analyst at Nvidia shareholder Laffer Tengler Investments. "And if so, how is that going to work?"
Last year, China accounted for 13% of Nvidia's revenue. For the second quarter ended July 2025, many analysts did not factor in any revenue from H20 sales in China, given the late U.S. approval and China's pushback, which complicates forecast calculations for the year.
