Nvidia’s stock declined more than 5 per cent in after-hours trading on Thursday after it detailed challenges and uncertainties in the China market, despite robust quarterly financial results.
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Shares of the US semiconductor giant closed flat at US$181.6, but dropped as low as US$172.45 after posting revenue growth of 56 per cent to US$46.7 billion for the three months that ended July 27. However, revenues from China, including Hong Kong, declined 24 per cent to US$2.8 billion, according to its latest financial report.
The company did not sell any H20 chips, designed specifically for the Chinese market to comply with US export controls, in the quarter. In comparison, H20 sales generated US$4.6 billion in the previous quarter.
Nvidia is facing regulatory pressure from the US and China. It has not resumed shipments of H20, even though certain China-based customers were granted a licence, because Washington asked for a 15 per cent cut of H20 revenue without “publishing a regulation codifying such requirement”, it said.
Meanwhile, the Chinese government has become another obstacle, “questioning whether our H20 products have built-in vulnerabilities”. The company said none of its graphics processing units contain back doors.
Nvidia values the China market, as CEO Jensen Huang estimated that the market could be a US$50 billion opportunity this year.
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