Why the fate of Nvidia in China may resemble what Baid done with Tesla

NvidiaLast income again emphasized his extraordinary success and undeniable market power: 46.7 billion in profit56 percent more than a year earlier, and a net profit of $ 26.4 billion. Its forecast for the next quarter amounted to $ 54 billion, overall in accordance with expectations. But one inaction stood out – No income from a specific H20 chip in China. This absence spoke a lot. The most valuable semiconductor firm in America fights for support in China as one of China’s own champions, Cambricon Technologies, increasing.

The problem for NVIDIA is not the basics of business, and of course not when performing its chips despite Allegations of “Backdoor”. Despite the heavy losses related to export restrictions to the US, the company has flourished and is now seeking to satisfy the extraordinary demand for its new Blackwell Ultra platform for the United States and allied data processing centers. Undoubtedly, this can lead to the world era, without taking the luggage that comes from its saturation with China. But instead of attracting confidence in this power, Nvidia has decided to continue the slope back to reassure the Chinese party states, hoping to seize a slice of the Chinese market.

Reports now suggest that the company is Development of the new chip “B30A” – more powerful than the H20, but designed precisely in order to overcome the export edges to the US. This sends the wrong signal. Instead of staying focused on its future outside China, these steps are reinforcing that Nvidia, despite repeated warnings and a clear trajectory of China’s industrial policy to techno-indigenization, simply cannot give up their dreams in China.

Remember what Baid done with tesla

It is still widely known that Beijing has a proven book. Foreign companies are transferred until the local champions are ready and then gradually moved. Already China’s regulators are pressing companies such as Alibaba, Deepseek and Bytedance to justify why they continue to search for NVIDIA products rather than use household chips from rapidly developing Chinese champions. Buying foreign equipment becomes political responsibility.

Enter Cambricon Technologies that many consider China’s alternative to Nvidia. In the interval of only two years, his actions were multiplied by about ten times, turning the company into an expensive market and another visible Beijing symbol to technological independence. Investors do not just pursue profits – they also re -bet on this political book. This year, Cambricon Swing on profitability has only strengthened madness, and its next-generation Siyuan 690 processor is still under development-advertising analysts as potentially closing H100 Nvidia performance and probably exceeding limited H20 chips to fasten the Nvidia position in China.

The excitement around Cambricon is less relevant to technical orientations than with the story of nationalist honor and internal impulse. Chinese developers such as Deepseek already signals What their latest models will be optimized for “home chips that will be released”. This creates an ecosystem where Cambrick is not just tolerated, but also perceived, its products are now used to strengthen the history of national progress. And since Cambricon is included in the list of US legal entities since 2022, each of their stock value and each hint of technological parity is considered in China as contrary to Washington – this year there was a breakthrough that was almost the same.

Forces that undermine NVIDIA position in China are the same, moving the rise of Cambrick, and repeat a notable list of the latest victims in the US in the Chinese market. Think What Baid done with Tesla. Huawei to AppleEither Deepseek to Chatgpt.

Whenever US officials boast that “best things” from China, a nationalist case for Cambrick and other local champions is becoming stronger. For Nvidia, the danger is real. Waiting for your Chinese dream, Kowtowing to Beijing does not guarantee the open market. It only strengthens the book and emphasizes the contrast between the foreign supplier, which is considered with the suspicion, and the local firm, which is marked as the embodiment of resistance and sustainability.

This moment was emphasized on the last call Nvidia. The leaders acknowledged that there were no H20 sales in China in 2 quarter, and that they did not believe that there were no “geopolitical issues” in the third quarter.

Neither the NVIDIA financial director nor the CEO registered these issues, but the signal is obvious: China’s refusal is political, not necessarily technical. XI Jinping has already set the course. At the educational session in April, the Politburo made it clear that AI’s indigenous equipment and software is now a national priority. No matter how many Chinese developers the “best chips” can want, the party and security will decide what they can buy – and the private sector will perform.

Trump Commerce SEC Howard Lutnick did not help

If Nvidia is required to remind you how politics can lead to market decisions in Beijing, this should consider Washington’s own role in accelerating this result. Secretary of Commerce July remarks of Howard Lutnik The fact that the US strategy was to sell China “not the best things, not the second best thing, not even the best … Just enough to get (China),” was the worst possible message at the worst time. His poorly chosen words turned what could be a quiet and gradual adaptation to the nationalist cause of the supreme. Security bodies, bureaucrats and corporate rivals such as Huawei and Smic have seized the insult to say that Nvidia’s dependence is both dangerous. Instead of buying H20s under radar, Chinese firms are now facing political pressure to give up and buying local ones.

This is the convergence of market impetus, political approval and national pride. The Chinese AI Plus initiative is aimed at integrating II in almost every sector by 2030. Plan of pairing of landmarks with large -scale investments in domestic chips, high bandwidth memory and national computing clusters. Cambricon has become visible proof that China believes that it should show that it can create an ecosystem independent of US technology, thus justifying the influence on the black list in Washington.

For investors, it can be said that Nvidia will remain a gold standard in efficiency in the foreseeable future, but in China, perfection and landmarks are not the only things that matter. The most important importance for the political and security institution, if not in the private sector, is “good” home technology that releases Beijing from dependence on foreign suppliers and secures its techno-indigenization project. Even if Cambricon’s Ziuan chips never compete in Blackwell Ultra Nvidia, they can be sufficient in order to move the Chinese development AI forward – and all the party needs are sufficient.

This makes Nvidia efforts to reassure both Beijing and Washington the situation in which the chips giant serves two masters and does not satisfy any.

.By Dewardric McnealHead Director and Senior Analyst LongView Global and CNBC participant