Huawei Moves Ratchet Up Nvidia's Stakes In The AI Trade War

Forbes

01-05-2025

Nvidia CEO Jensen Huang made a remarkable admission this week: He's fearful of Huawei. He should be, as Huawei is a formidable technology power in the world, its history of using political advantages to gain market share, and the current trade-war environment all theaten to shift the nexus of power back to China.
Speaking in Washington, D.C. this week, Huang expressed concerns about China's growing technology prowess and its threat in the trade war.
'They're incredible in computing and network tech, all these central capabilities to advance AI,' Huang said. 'They have made enormous progress in the last several years.'
It's a massive moment for both Nvidia and Huawei, as the two powers go head-to-head in the world's most explosive market: AI. And in the backdrop, a global trade war threatens to ratchet up the pressure.
Earlier this week, the Wall Street Journal first reported that Huawei is working on tests of its new Ascend 910D chip, which competes somewhere between Nvidia's midrange H100 and H200 chips, which are targeted at AI applications but subject to export controls to China. Huawei plans to have samples of the chips as early as the next few weeks, said the WSJ.
But this is just one element of the multi-layered threat to U.S. technology since the arrival of escalating tariffs, export controls, and the trade war, which China is using to build momentum for its technology industry with countries that feel alienated from the United States. That tactic appears to be working so far.
For those in the networking industry, Huawei's recent success may be reminiscent of its rise as a power in networking technology in the early 2000s, when it methodically developed products to rival the portfolio of networking giant Cisco. Huawei gained huge market share worldwide, especially in developing nations, before the United States and some European countries moved to ban Huawei products for security reasons.
AI raises those stakes even further, with its increased privacy and data security concerns, as well as its potential market size. Huawei's threat to Nvidia mirrors the threat it posed to Cisco. And with a $25 billion R&D budget, armies of well-trained engineers, and the support of the Chinese government, Huawei has enormous market power.
At the heart of the tech upheaval is the U.S. administration's all-out trade war with China. In addition to the cumulative 145% tariff on imports from China, there are export restrictions on AI chips as well.
Nvidia was told on April 9 that its H20 chip will be subject to licensing for export to China. That chip, which accounts for several billion dollars in revenue annually for Nvidia, was designed especially for the Chinese market due to its limited capabilities compared to other Nvidia GPUs. With the new restrictions, Nvidia is, according to its recent 8K SEC filing, taking 'up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves.'
AMD issued a similar statement on April 15 that it will take an $800 million charge due to restriction of its specially designed MI308 chip for the Chinese market.
CEO Huang has been working overtime to set a more favorable trade policy. Earlier he apparently managed to avoid Trump restrictions on H20 chips for China in return for a pledge to manufacture chips and entire supercomputers in the U.S. over the next few years. But that appears to have been only a temporary relief from export controls.
Mending the tariff troubles was a key focus for Nvidia following Huang's recent trips to Beijing and Shanghai. On April 16, Huang flew to China, where on April 17 he met with Chinese Vice Premier He Lifeng and DeepSeek founder Liang Wenfeng. According to multiple sources, the mission was to provide new avenues in the Chinese market and to improve the environment for negotiations between the U.S. and the PRC. U.S. Commerce Secretary Howard Lutnick has also been firm on curbing any chip sales to China, and there's little sign of any break in policy.
Huang has said the Trump administration should consider revising the regulations of AI export controls. Increased U.S. export restrictions on AI chips to China are pushing the Chinese market toward domestic providers such as Huawei—but they could also have the knock-on effect of pushing the rest of the world to look at Chinese technology.
In general, Huang's comments show Nvidia is increasingly concerned about the impact the trade war will have on its business, as is the stock market. Nvidia shares are down 24% in the past six months. A pivotal moment came with the release in January of new AI models from Chinese company DeepSeek, which shows that the prices of AI technology are dropping and China is stepping up its competition. Recent AI chip controls and Huawei's expanding influence contribute to the problem.
Meanwhile, U.S. tariffs and export restrictions imposed by the Trump administration are snarling technology supply chains, threatening production, and forcing a dramatic shift in plans for a range of U.S. companies. Tariffs are among several factors contributing to the recent selloff in technology stocks. The longer that proposed tariff policies go without negotiated settlements, the bigger the trouble for technology and other businesses. Without clear insight into the longer-term path of trade deals, executives will have trouble sourcing components, planning budgets, and figuring out where to build manufacturing facilities.
Apple, one of the largest companies most under threat of the trade war—in addition to Nvidia —has responded by saying it will shift the bulk of its production to India from China.
Apple's problems may be more treatable than Nvidia's, because its challenges are more rooted in the supply side rather than the demand side. Apple can move production out of China but realizes the bulk of revenue elsewhere. Nvidia's challenges are more complex and highlighted by potential competition from Huawei. If geopolitical tension drives more countries away from the U.S., Huawei can benefit by finding new customers.
While at this point the ultimate impacts of export controls and the trade war on Nvidia's overall business are difficult to quantify, the recent trend shows a gathering wave of concerns. This appears to present the largest opportunity to Huawei since the Western embargo of its telecommunications business. It's now emerging as one of Nvidia's chief rivals in the AI chip business.
Like most industry research and analyst firms, Futuriom provides paid research and marketing services to technology companies. These services include subscription research, custom research, and report sponsorships. Of the companies mentioned in this article, Futuriom has had a small paid relationship with NVIDIA in the past 12 months. Individuals from some of the companies mentioned may subscribe to our premium research service, Cloud Tracker Pro.