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Nvidia CEO turns heads with stern warning about China AI market

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Nvidia CEO turns heads with stern warning about China AI market originally appeared on TheStreet.

Move over, Jimmy Stewart. Jensen Huang’s got this one covered.

In the classic 1939 film “Mr. Smith Goes to Washington,” Stewart portrays Jefferson Smith, a naive, newly appointed U.S. senator who takes on government corruption.

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While nobody is likely to call Huang naive, the co-founder and CEO of AI-chip juggernaut Nvidia  (NVDA)  spoke bluntly about the Trump administration’s ban on sales of the company’s H20 chips to China. That prompted Wedbush analysts to issue a research note titled “Mr. Huang Goes to Washington.”

“China is one of the world’s largest AI markets and a springboard to global success,” Huang said during the company’s earnings call. “With half of the world’s AI researchers based there, the platform that wins China is positioned to lead globally.”

He wasn’t kidding. A recent Morgan Stanley report found that China’s AI industry and related sectors could grow into a market valued at $1.4 trillion by 2030.

U.S. export controls could create barriers for AI development in China but won’t stop its progress, the investment firm said, noting that “AI is at the center of business priorities, consumer behavior and economic growth in China.”

Nvidia CEO Jensen Huang said 'export restrictions have spurred China’s innovation and scale.'Image source: SOPA Images/Getty Images
Nvidia CEO Jensen Huang said ‘export restrictions have spurred China’s innovation and scale.’Image source: SOPA Images/Getty Images

“Today, however, the $50 billion China market is effectively closed to US industry,” Huang said. “The H20 export ban ended our Hopper data center business in China. We cannot reduce Hopper further to comply.

“As a result, we are taking a multibillion-dollar write-off on inventory that cannot be sold or repurposed. We are exploring limited ways to compete, but Hopper is no longer an option. China’s AI moves on with or without US chips. It has to compute to train and deploy advanced models.”

More Nvidia:

The Santa Clara, Calif., company, which posted better-than-expected fiscal-Q1 earnings and revenue, said it had missed out on $2.5 billion in sales during the quarter due to the export restrictions on H20.

“The question is not whether China will have AI; it already does,” Huang said. “The question is whether one of the world’s largest AI markets will run on American platforms.”

“Shielding Chinese chipmakers from US competition only strengthens them abroad and weakens America’s position,” he noted. “Export restrictions have spurred China’s innovation and scale.”

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