Even as the head of the world's first five trillion dollar company, this week hasn't been great for Nvidia CEO Jensen Huang. Despite all his efforts, President Trump did not discuss the sale of advanced Nvidia GPUs with Chinese Premier Xi Jinping this week, nor did he give the official go-ahead for Nvidia to develop and sell a cut-down version of its flagship Blackwell GPUs.
The ongoing trade war between the two world's largest economies has Nvidia stuck in the middle, with the U.S. looking to maintain its technological lead, while Nvidia seeks to maintain its strong software and hardware position in Southeast Asia to fight off a growing domestic chip industry in China.
For most of this year, the goals of the U.S. government and Nvidia have been mostly aligned, leading to enormous deals for the GPU manufacturer, including government contracts and stakes in government-owned businesses. But as China and America have become more entrenched in their trading positions, both have begun to move towards domestically controlled supply chains of the latest chip designs, leaving Nvidia facing a waning Chinese market share.
From diffusion to dissilution
Nvidia has been selling GPUs to China for a long time, but while it was previously mostly related to gaming and cryptocurrency mining, the growth of the AI industry has made these sales more crucial and the fallout more dramatic. Export controls put in place in 2022 curtailed its sales of its latest GPUs to China, but Nvidia has made bespoke models like the H20 and 5090D that offer reduced performance compared to the flagship models it sells in Western markets.
That continued in 2025 with the introduction of the AI Diffusion rule, which was designed to restrict Nvidia's sale of its top chips to China and other blacklisted countries around the world. This was ultimately pulled by the Trump administration mere days before it was set to become enforceable, but since then, it has swung back and forth, allowing sales, then disallowing them. Right now, Blackwell GPUs remain off the table for China, at least for now.
Even with Nvidia praising the administration for its stance on AI and global sales, the U.S. has maintained an antagonistic stance towards China on trade with various tariffs and policies, often brandishing access to Nvidia GPUs as a bargaining chip in negotiations.
China's response has been strong, cutting international companies' access to its domestic manufacturing facilities, and pushing for its own firms and government offices to utilize as many domestically produced chips as possible. Huawei has developed a rack-scale CloudMatrix 384, which is being pushed by the Chinese government, though it is not as efficient as Nvidia's latest offerings.
Both China and the U.S. are driving toward chipmaking self-sufficiency, or at least more self-controlled supply chains. For Nvidia, this has led to a waning of the company's influence in China. Access to its hardware is simply unreliable, so countries and companies are looking for alternatives, and the Chinese government is pushing companies toward homegrown chips.
The CUDA stronghold is under siege
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