Nvidia (NVDA) is suffering from a China problem.
However, it has a China opportunity as well.
CEO Jensen Huangsaid the company’s prediction of a $200 billion central processing unit market includes China, showing that Nvidia still anticipates strong long-term demand in one of the world’s most important AI markets.
That matters because China is both a growth lever and a regulatory issue for Nvidia. The company wants access to Chinese clients, but U.S. export rules and China’s own drive to create domestic chip manufacturers continue to block that access.
Nvidia already dominates the AI processor industry used to train big models. But the next generation of artificial intelligence might require more than just raw GPU power.
With business models moving toward agentic AI systems that can more independently conduct tasks, the need for central processing units, or CPUs, is becoming increasingly critical.
In the most recent results call, Huang said the company’s new Vera central processors open up a new $200 billion market for Nvidia. Asked in Taipei by Reuters if that projection included China, Huang said, “I would think so.”
Nvidia keeps China in its long-term AI forecast
China is still one of the most significant and most complex markets for Nvidia.
The business has secured U.S. permits to export its H200 AI chips into China, but Chinese officials have not approved those sales as Beijing continues to encourage domestic chip makers.
That leaves Nvidia in a weird position.
The U.S. has approved certain shipments, but the company still can’t completely access one of the world’s largest AI markets.
Huang made plain he wants to make changes.
“H200 has been licensed to ship to China,” Huang told reporters, according to Reuters. “It would be terrific to be able to serve that market. The Chinese market is very important. It’s very large, of course.”
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The statements come after recent conversations between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing that failed to yield a fast breakthrough for Nvidia’s H200 sales.
Reuters reports that the United States has given the green light to about 10 Chinese firms to buy Nvidia’s H200, the company’s second-strongest AI processor. But no delivery has yet taken place.
That difference between approval and sales is what investors care about.
China could add another strong dimension to the growth story of Nvidia. Until approvals materialize into shipments, it’s a market Nvidia can define more readily than it can fully service.
Photo by BRENDAN SMIALOWSKI on Getty Images
Nvidia’s Vera Rubin platform expands the AI story
The China comments come as Nvidia seeks to convince investors its growth runway is still broad enough to justify its massive price.
That’s the $200 billion CPU market.
For Nvidia, extending further into CPUs would make the business less reliant on being perceived as solely a GPU winner and more like the key platform driving the AI data center.
Key Nvidia China and AI chip updates
- Huang said Nvidia’s $200 billion CPU market forecast includes China.
- Nvidia has U.S. licenses to sell H200 chips to China.
- Chinese approval for H200 sales has not yet arrived.
- Reuters reported around 10 Chinese firms have been cleared by the U.S. to buy H200 chips.
- Nvidia is ramping production of its Vera Rubin AI platform.
- Huang said Taiwan’s supply chain faces a busy second half.
- Nvidia continues to rely heavily on TSMC for advanced chip production.
Huang has suggested Nvidia can continue to grow by adding more customers and other products beyond its flagship AI chips.
This comprises the company’s Vera Rubin platform, which puts together Nvidia’s Vera CPU and Rubin GPU architectures.
Huang said Nvidia is rushing the manufacturing of Vera Rubin, producing what he called a “very busy second half” for Taiwan’s supply chain.
This is important because Taiwan Semiconductor Manufacturing (TSM) is tightly linked to Nvidia’s AI ambitions.
Much of Taiwan Semiconductor Manufacturing’s business is making the sophisticated chips that are fuelling the AI revolution. Huang said he would meet with TSMC during his trip to Taiwan.
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If Vera Rubin succeeds, Nvidia could deepen its role across the entire AI computing stack, from CPUs to GPUs to networking and software.
That is the kind of broader platform story Wall Street has rewarded.
Nvidia faces new scrutiny over AI chip controls
The China opportunity also comes with another problem: enforcement.
In recent days, Taiwanese authorities claimed they are probing three people accused of unlawfully exporting high-end AI servers produced by Super Micro Computer (SMCI) using Nvidia chips subject to U.S. export rules.
Asked what Nvidia might do to prevent AI chips from being diverted, Huang said the business is “very rigorous” in outlining the laws and regulations to partners and requiring they follow them.
“Ultimately, Super Micro has to run their own company,” Huang said, according to Reuters. “I hope that they will enhance and improve their regulation compliance and avoid that from happening in the future.”
The sensitivity stems from U.S. regulatory efforts to limit China’s access to advanced AI technologies.
In March, the U.S. Justice Department charged three people connected to Super Micro, including its co-founder, with helping ship at least $2.5 billion worth of U.S. AI technology to China in violation of export restrictions.
The difficulty for Nvidia is obvious.
The corporation wants to tap China’s AI market while simultaneously staying in line with U.S. export restrictions and not getting dragged deeper into geopolitical turmoil.
That balancing act could be the defining feature of the next chapter of Nvidia’s growth story.
The business already has huge demand for its AI chips, a tremendous CPU opportunity, and extensive relationships with Taiwan’s manufacturing ecosystem.
But China remains an uncertain factor.
If ever Nvidia has full access to Chinese clients, the $200 billion CPU opportunity could look much more significant.
If it isn’t, investors may have to determine whether the tale of Nvidia’s AI platform is powerful enough to overcome one of the world’s biggest marketplaces being largely shut.
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