Nvidia Highlights Impact Of US-China Trade War

Nvidia chip illustration (photo: x @nvidia)

JAKARTA - Nvidia's business in China will be the investor's focus when the AI chipmaker reports on its earnig results on Wednesday, August 20 following an unusual deal with Donald Trump's administration and Beijing's next attempt to limit imports.

Stuck in a trade war shootout that took place between Washington and Beijing, the fate of Nvidia's business in China depends on where the world's two largest economies land in tariff talks and chip trading restrictions.

The tweet of the artificial intelligence (AI) chip recently agreed to pay the US federal government 15% of its sales in China in exchange for export licenses, a move that has drawn criticism from both parties.

Beijing - despite its great interest in Nvidia chips - has urged domestic companies to limit purchases due to growing security concerns.

There have been reports that Nvidia has notified some of its suppliers to suspend China's special H20 chip production. But Nvidia is also being reported to be developing a new, stronger chip for China.

"We have to get clarity from these two governments first, whether China wants the chips and whether the (US) administration will allow them," said Jamie Meyers, senior analyst at Laffer Tengler Investments, shareholder of Nvidia. "And if so, how does it work?"

Last year, China accounted for 13% of Nvidia's revenue. For the second quarter ending in July 2025, many analysts did not factor in revenue from H20 sales in the country as US approval came late in the quarter, while China's refusal complicates forecast calculations for the year.

In May, Nvidia stated that the restrictions would reduce sales by US$8 billion in the July quarter. The restrictions resulted in a cost (charge) of US$4.5 billion in the previous three months.

Overall, the company is expected to report that second-quarter revenue jumped 53.2% to 46.02 billion US dollars, according to LSEG data, much lower than the triple-digit growth it experienced over many quarters.

But analysts say the AI chip business as a whole is booming, with strong demand flowing from tech giants like Meta and Microsoft, which have expanded their capital budget.

However, positive comments on requests from Nvidia CEO Jensen Huang could boost AI stocks recently sold over concerns that investors may be too high in assessing them.

Nvidia shares have risen more than a third so far by 2025, a smaller increase for that period compared to the previous two years. This still exceeds a more than 15% increase in the browser chip index (.SOX) and a nearly 10% year-to-date increase in the S&P 500 index (.SPX).

For the third quarter, analysts expect Nvidia to project revenues of 52.96 billion US dollars, up 51% on an annual basis.

Sekitar 6 miliar dolar AS dari jumlah itu bisa berasal dari China, perkiraan atalis dari warji Sandler dengan pertumbuhan lebih lanjut pada tingkat 12%-15%.

But Nvidia could take a 5 to 15 percentage shot against the gross margin on the chip aimed at China because of the federal deal, with Bernstein analysts estimating it cuts about one point from Nvidia's overall margin.

The company's adjusted gross margin is expected to drop by almost 4 percentage points to 72.1% in the second quarter. In the October quarter, the gross margin is expected to contract by almost two points to 73.2%.