Why Nvidia’s fate in China may look a lot like what BYD did to Tesla

NafidiaThe last profits once again highlighted its exceptional success and the undeniable strength of the market: 46.7 billion dollars in revenueWith an increase of 56 percent over the previous year, and the net income of $ 26.4 billion. Its expectations for the next quarter amounted to 54 billion dollars, in line with expectations on a large scale. But one omission emerged – There are no revenues from its H20 chip in China. This absence occurs folders. The most valuable semiconductor company is struggling to maintain the feet in China as one of the champions of China, Cambricon techniques, rise.

The Nvidia problem is not with the basics of its business, and certainly not with the performance of its chips, though Backdooor allegations. Despite the severe losses associated with US export restrictions, the company has flourished and is now racing to meet the exceptional demand for our new Blackwele Ultra and allied data centers with us. There is no doubt that it can lead the era of global artificial intelligence without taking the luggage that comes from its fascination with China. However, instead of extracting confidence from this force, NVIDIA chose to continue bending back to satisfy the party’s condition in China, hoping to adhere to a shrinking slide from the Chinese market.

Reports now indicate that the company Development of a new chip “B30A” – It is stronger than the H20, but it was specifically engineered to coordinate our export borders. This sends the wrong sign. Instead of focusing on its future outside China, these moves enhance the perception that NVIDIA, despite repeated warnings and the clear path of Chinese industrial policy towards technical assembly, cannot simply be abandoned by China’s dream.

Remember what BYD did to Tesla

What is widely known is that Beijing has a truly and truly playing book. Foreign companies are tolerated until local heroes are ready, then gradually displaced. Indeed, the organizers in China pressure companies such as Alibaba, Deepseek and Bytedance to justify the reason for their continued search for NVIDIA products instead of using local chinese chips of Chinese heroes quickly. Public purchase of foreign devices has become a political responsibility.

Enter CAMBRICON technologies, what many think is one of China’s alternatives to NVIDIA. In just two years, its shares have multiplied nearly ten times, as the company turned into my beloved market and another symbol visible to the leadership of Beijing for technological self -reliance. Investors are not only chasing profits – they are also betting on winning the political playing book again. CAMBRICON swinging to profitability this year only of frenzy, with the next generation of Siyuan 690-which is still under development-is described by analysts as a possibility that it is likely to be closed in the performance of NVIDIA H100 and is likely to surpass the H20 chips restricted to the consolidation of NVIDIA in China.

The excitement about Cambricon has nothing to do with technical standards more than narration about national pride and local momentum. Chinese developers like Deepseek actually indicates Their remnants will be improved for “local chips that are published soon”. This creates an environmental system as not only to tolerate Cambricon, but is adopted, as its products are now used to inflate the story of national progress. Because Cambricon has been listed in the list of US Department’s entities since 2022, every rise in the price of his share and every hint of technological parity is seen as a challenge in Washington – a moment of outbreaks celebrated in the same way that Deepseek was earlier this year.

The forces that undermine the NVIDIA position in China are the same forces that drive the rise of Cambricon, and the frequency of a prominent list of recent American business losses in the Chinese market. He thinks What did Byd do to Tasla?and Huawei to AppleOr Deepseek to Chatgpt.

Every time US officials boast of maintaining “the best things” from China, the national issue of Camperone and other local heroes is increasing. For NVIDIA, the risk is real. Adhere to her Chinese dream, Kowtowing To Beijing, does not guarantee an open market. It only enhances the playing book and highlights the contrast between the foreign resource that treats suspicion, and the local company that is celebrated as an embodiment of resistance and flexibility.

This point has been emphasized on the latest NVIDIA profit call. Executive officials admitted that there are no H20 sales to China in the second quarter, and that they do not assume anything in the third quarter due to “geopolitical issues.”

The Director of Finance at Nvidia nor the CEO of these issues was not explained, but the reference is clear: China rejected politically, and not necessarily technically. Xi Jinping has already set the course. At the Polidburo study session in April, he made it clear that artificial intelligence devices and software compensation is now a national priority. Regardless of how much Chinese developers may want in the “best chips”, the party and safety apparatus will decide what they can buy – and will comply with the private sector.

The Trump Huard Lootnick did not help

If NVIDIA needs any reminder of how politics is to lead market decisions in Beijing, you should look at Washington’s role in accelerating this result. Trade Secretary Howard Lootnick notes July The US strategy was to sell China “not the best things, not the second best, not even the third best … enough to get [China] He was addicted, “It was the worst possible messages as possible. His unlawful words have turned into what might be a calm and gradual adaptation in the market with a higher national issue. Security agencies, bureaucrats, and competitors of companies such as Huawei and SMIC were seized by the Chinese. Completely and buying local.

This rapprochement between the momentum in the market, political support, and national pride is not a coincidence. The AI ​​Plus initiative in China aims to integrate artificial intelligence almost every sector by 2030. The plan enhances adoption standards with huge investments in the local chips industry, high -frequency domain memory, and national computing groups. Cambricon has become a visible point of evidence that China believes it needs to show it can build an independent environmental system on American technology, and thus applies to the influence of the black list in Washington.

For investors, it is fair to say that NVIDIA will remain the gold standard in performance in the foreseeable future, but in China, perfection and performance standards are not the only things that concern. What matters most to the political and security establishment, if not the private sector, is the presence of a “good enough” local technology that Beijing is free from relying on foreign suppliers and proving its project for technological assembly. Even if the Siwan Camperone chips never compete from Nafidia Blackwell, it may be sufficient to push the development of artificial intelligence in China – and enough is all the needs of the party.

This makes NVIDIA efforts to appease both Beijing and Washington a position in which the chips giant does not satisfy.

–by Diordrick McKenilManaging Director and Graduate Policy Analyst at LongView Global, CNBC shareholder