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U.S. chip giant Nvidia is caught in the middle of the U.S.-China trade war, but it'll take more than geopolitical tensions to rein in demand for the company's chips. From Hong Kong, reporter Sherisse Pham explains.
SHERISSE PHAM, BYLINE: Nvidia is riding the AI boom. Its share price has tripled in the last couple of years, making it the most valuable company in the world. But the ongoing U.S.-China trade war has complicated things. This week, Chinese regulators said a preliminary investigation found Nvidia had violated the country's anticompetition laws. A Nvidia spokesperson said that the company complies with the law in all respects and will cooperate with all relevant government agencies.
The timing of the announcement was noteworthy. It came just as U.S. and Chinese negotiators were meeting in Madrid to try to hash out a trade deal. Here's Daniel Heyler, senior tech analyst at EFM Asset Management in Hong Kong.
DANIEL HEYLER: This is obviously a negotiation technique on both sides, as it relates to the trade deal. And so Jensen seems to be - I think most U.S. CEOs are respectful of this process.
PHAM: He's talking about Nvidia CEO Jensen Huang, who has lobbied the Trump administration to allow Nvidia to sell more chips to China. In an unprecedented move, the company even agreed to pay some of its China revenue to the U.S. government, a deal that appealed to President Trump.
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PRESIDENT DONALD TRUMP: So I said, listen, I want 20% if I'm going to approve this for you for the country - for our country - for the U.S. I don't want it myself.
PHAM: The president went on to say that Nvidia's Huang negotiated that number down to 15%. The deal has yet to come into effect, and Huang told investors last month that the company could be missing out on huge sales in China because of restrictions.
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JENSEN HUANG: The China market I've estimated to be about $50 billion of opportunity for us this year if we were able to address it with competitive products.
PHAM: But while Nvidia is caught in the middle of two superpowers, geopolitics are no match for the demand for Nvidia chips. Here's Heyler, the senior tech analyst again.
HEYLER: The market forces are very powerful. And again, the economics of an Nvidia chip are phenomenal. So the downstream companies absolutely want those and will keep buying them.
PHAM: Despite restrictions, at least $1 billion worth of Nvidia's advanced chips were shipped to China in the three months after Trump tightened export controls. That's according to a Financial Times report analyzing sales contracts and company filings. Part of the reason - China's domestically made chips simply aren't as good, which means, Heyler says, that when it comes to the geopolitics around chips, China, more than Nvidia, is the one that is really stuck between a rock and a hard place.
For NPR News, I'm Sherisse Pham in Hong Kong.
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