Nvidia is facing an unexpected crisis in China. Despite Washington easing export restrictions on advanced AI chips, the chipmaker still hasn't confirmed a single shipment to its once-largest market. The delay is more than a logistics problem - it's handing Chinese competitors like Huawei and Moore Threads a golden opportunity to lock in customers who've been desperately seeking alternatives to Nvidia's dominance. For a company that previously generated billions from China sales, the extended silence raises questions about whether regulatory approval means much when the window of opportunity is already closing.
Nvidia just got permission to play in China again, but it's sitting on the sidelines while homegrown rivals run up the score. The U.S. government's decision to relax export controls on certain advanced AI chips was supposed to reopen a multibillion-dollar market for the world's most valuable chipmaker. Instead, weeks after the policy shift, Nvidia hasn't confirmed shipping a single processor to Chinese customers.
The silence is deafening for a company that once counted China as its third-largest market. Before Washington clamped down on semiconductor exports in 2022, Nvidia was pulling in billions annually from Chinese tech giants hungry for GPUs to power everything from cloud computing to AI research. Those sales evaporated virtually overnight when the Biden administration added Nvidia's flagship chips to the restricted list, citing national security concerns about military applications.
Now the rules have changed again, at least partially. Washington approved a new category of export licenses for downgraded AI chips that meet specific performance thresholds - processors powerful enough to be commercially viable but supposedly limited enough to satisfy national security hawks. Nvidia designed chips specifically for this regime, tailored to squeeze under the technical ceiling while still offering meaningful computing power.
But approvals on paper don't translate to chips in data centers. The company's continued inability to confirm shipments suggests the regulatory process remains tangled in red tape, or that the approved specifications are so restrictive that Chinese customers aren't biting. Either way, the delay is proving costly in ways that go beyond immediate revenue.
