Nvidia’s share of China’s AI-chip market is falling as Huawei closes the gap, Reuters reported. The shift raises questions about how much of Nvidia’s $215.9 billion revenue base remains exposed to Chinese competition.
Reuters reported that Nvidia’s share of China’s AI-chip market has declined as Huawei catches up. The report places Nvidia and Huawei in direct competition for demand in one of the world’s largest markets for artificial-intelligence processors.
The development comes as Nvidia’s latest annual company figures show $215.9 billion in revenue, up 65.5% year over year, with a 71.1% gross margin and a 55.6% net margin. Those figures describe the company overall rather than its China business, so the specific revenue effect of Huawei’s gains is not established here.
Nvidia is the company directly exposed through sales of AI chips in China. Huawei is the competing supplier identified in the report, and its progress could affect Nvidia’s access to Chinese customers and the product mix available in that market.
The report describes a change in market share rather than a quantified change in Nvidia’s total revenue or earnings. The pace of Huawei’s gains, the size of Nvidia’s remaining China business and any effect on pricing are open questions.
Nvidia’s next financial update will provide the next dated opportunity to assess whether China competition is appearing in reported results or company commentary.
Our take
1 / 7
Our read · Oct 13
Huawei is catching Nvidia in China’s AI-chip market as Nvidia’s share declines, Reuters reported.
Why
The immediate read-through is to Nvidia’s China opportunity, but the company’s $215.9 billion revenue base is global and the market-share change is not quantified here. Nvidia’s 71.1% gross margin and 55.6% net margin leave substantial company-wide profitability, while the next results and commentary should clarify whether Huawei’s gains are affecting reported demand or pricing.
What could change this view
The read fails if Nvidia’s next results show China demand and margins remaining intact despite Huawei’s market-share gains.
▲ The case it holds
Nvidia’s $215.9 billion revenue and 65.5% year-over-year growth show a large, expanding business whose overall results may absorb pressure in China.
▼ The case it breaks
Huawei’s narrowing gap directly threatens Nvidia’s position in China’s AI-chip market, but the financial impact remains unquantified.
Prices: 1D EOD · OCT 12 CLOSE, licensed end-of-day data.
Source: Investing.com · Published here TUE, OCT 13 · 1:45 AM ET · the only report in this record · How this is decided →
Photo: File photo · NVIDIA’s headquarters, Santa Clara · Aug 2018 · Coolcaesar · CC BY-SA 4.0 · Source & license
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