TMTPOST -- Nvidia   Corporation   management expressed   upbeat   on   performance in the Chinese market   despite   tepid guidance   they   offered that didn ’ t   factor sales   of H20,   a China-tailored artificial   intelligence   ( AI )   chip   to comply with the   Biden-era   export controls.

Credit：Nvidia

China   is estimated to bring   about $50   billion of opportunity   for Nvidia this year,   Huang told   analysts on   an earnings call   on   Wednesday.   "If we were able to address it with competitive products and if it ’ s [ opportunity worth of ]   $50   billion   this year, you would expect it to grow, say, 50% per year as as the rest of the world ’ s AI AI market is growing as well,"   Huang said when asked about the long-term prospects of   the China opportunity.  

Huang stressed the significance of China. It is   the second largest computing market in the world   as well   as the home of AI researchers since about half of the   world ’ s   researchers are from   there, and in addition, the vast   majority of the leading   open-source   models are created there, Huang said.   Therefore,   he believes it ’ s very important for American   tech   companies to be able to address the market.

As part of efforts   to address the Chinese market,   Huang   floated the possibility of approval from the U.S. government to sell   Nvidia ’ s   latest Blackwell-architecture   chips.   "The the opportunity for us to bring Blackwell to the China market is a real possibility,"   Huang   said.   "And so we just have to keep advocating the the sensibility of and the importance of American tech companies to be able to lead and win the AI race and help make the American tech stack the global standard."

Huang made the remarks right   after   Nvidia   posted mixed   financial results   for its second   fiscal quarter ended   July 27.   It recorded revenue of $46.74 billion, beating Wall Street   estimated $46.23 billion. That   represented the slowest growth rate   in   more than two years   with a year-over-year ( YoY ) increase of 56% in sales, slowing down from   a 69% surge three months earlier.On non-GAAP basis, adjusted earnings per share ( EPS ) shot up 54% YoY to $1.05   after a 33% YoY increase for the preceding quarter.   The   EPS   was stronger than   analysts   projected $1.00.   

The revenue growth was in part driven by Blackwell chips. Nvidia Chief Financial Officer ( CFO ) Colette Kress said sales of Blackwell offerings rose 17% quarter-over-quarter ( QoQ ) .   The   EPS   surge   benefited from a $180 million release   of previously reserved H20 inventory,   from approximately $650 million in unrestricted H20 sales to a customer outside of China.

But Nvidia ’ s   top business   Data Center   missed   estimates for   the second consecutive quarter. The segment brought RMB41.1   billion   with a 56%   YoY   increase,   still blew   analysts   expected   $41.29 billion.   The sales was dragged by the new U.S. export restriction on H20 chips   to   China. Nvidia said there were no H20 sales to China-based customers in the second quarter. Data Center compute   revenue dropped 1% QoQ, driven by a $4.0   billion   reduction   in H20   sales,   according   to Kress.

Looking forward the third   fiscal quarter, Nvidia expected revenue to be $5.4   billion, plus or minus 2%.   That   was   above   the   consensus   estimates of $53.46 billion, but   some   analysts   had   their optimistic   projection of more than   $60 billion, which   was way   above Nvidia ’ s guidance.

Nvidia said   it   has not assumed any H20 shipments to China in   the guidance   for its third   quarter ended   in   September. Such   forecast   signaled the growth   is decelerating   when it is still uncertain when   and how   H20 sales   in China would resume normal. Kress   showed cautiously optimistc on H20,   stating that Nvidia   is expected to deliver   $2.0 billion   to $5.0   billion of   revenue from H20 for   the third quarter   if "geopolitical issues reside."

Kress   told analysts   the Trump administration   began reviewing export licenses for H20 sales in China in late   July. While a select number of Nvidia ’ s   China based customers have received licenses over the past few weeks, the company   have not shipped any H20 based on those licenses.

U.S.   President Donald Trump on August   11   confirmed   reports   that Nvidia   will be allowed   to sell   H20 chips to   China, in exchange   for   giving   the U.S. government   15% of the revenue they   get   from   the   sales.   U.S. officials have expressed an expectation that the government   will receive 15% of the revenue generated from licensed   H20 sales. though   the governemnt   to date   has not published a regulation codifying such requirement,   Kresss   on Wednesday noted.