Nvidia’s China-based rival posts 4,300% revenue jump as chipmakers’ earnings reported no H20 chip sales to the country

Big ·NvidiaNvidia’s China-based rival posts 4,300% revenue jump as chipmakers’ earnings reported no H20 chip sales to the countryBy Nino PaoliBy Nino PaoliNews FellowNino PaoliNews FellowNino Paoli is a Dow Jones News Fund fellow at Fortune on the News desk.SEE FULL BIO Nvidia CEO Jensen Huang has long criticized U.S. export controls, saying they only galvanize China rivals to innovate in the chipmaker’s absence

Wan Quan/VCG via Getty ImagesCambricon, a China-based semiconductor firm, just posted their greatest fit to date and a roughly 44-fold revenue surge

The company’s rapid growth comes as Nvidia recorded no chip sales to China during its second quarter and signals a push by local players to innovate in the giant’s absence, experts tell Fortune

The earnings, released late Tuesday, serve as an example of Nvidia’s growing local competition in China, as the government and market seek alternative chipmakers to gain traction in the region

Nvidia’s in China has been tied up in U.S. export restrictions and geopolitical tensions, and the behemoth recorded no H20 chip sales to China in the second quarter, per its earnings release yesterday

Cambricon’s first-half revenue surged to 2.88 billion Chinese yuan ($402.7 million), the company reported this week

The Chinese upstart, created by two “genius brothers,” is partially state-owned and headquartered in Beijing

The company’s stock is now China’s most expensive, overtaking liquor company Kweichow Moutai

Still, the whopping revenue growth is a far cry from Nvidia, which reported $46.7 billion in the second quarter alone

But experts tell Fortune Cambricon’s growth reflects a larger push to create local Nvidia rivals in China—especially as the giant deals with increased export restrictions under the Trump administration. “Nvidia apparently has a better overall offerings in terms of the hardware in China, but because of the export controls, right now they cannot sell, basically, to China,” Ray Wang, re director of semiconductors, supply chain, and emerging at The Futurum Group, told Fortune. “They leave a big market void for a Chinese competitor to fulfill.” Wang said large China companies Huawei and SMIC are “catching up rapidly” to Nvidia in terms of both duct and quality, as well as duction capacity. “That’s a serious concern for both Nvidia and the U.S. government’s agenda in terms of… dominating AI globally,” he said

Export tensions with China Earlier this year, the U.S. enforced stricter export controls to China, at one point banning H20 chips—which are known to be less powerful than Nvidia’s AI chips—from being sold to the country

In July, the ban was lifted, but it also allowed time for companies to invest in innovation. “The blem with banning [H20 chips] is you’re effectively handing the AI market and training over to companies Huawei or Cambricon or… other local players,” Stacy Rasgon, senior analyst of U.S. semiconductors and semiconductor capital equipment at Bernstein Re, told Fortune

Rasgon pointed out that, in Cambricon’s case, the roughly 44-fold revenue increase to $402.7 million in the first half of this year means the company went from “tiny to small.” He said he’s less focused on the percentage growth than the reason behind it. “There’s a big push in China for self-sufficiency,” Rasgon said

Cambricon’s record fit was helped by a wave of demand for Chinese chips after Beijing encouraged using local nology, citing security concerns and uncertainty over the Trump administration’s export curbs

The most recent catalyst for Cambricon’s surge came from AI startup DeepSeek, which said last week its model comes with a feature that can optimize locally-made chips

Last week, the Chinese government told its companies to stop using Nvidia’s H20 chips after U.S

Commerce Secretary Howard Lutnick said China would only receive the company’s “fourth best” chip when speaking with CNBC, only adding fuel to the fire. “You want to sell the Chinese enough that they get addicted to the American nology stack,” Lutnick added

Despite nology advancements by Nvidia rivals amid geopolitical tensions, demand for its H20 chips remain—even in the face of regulatory hurdles the company is navigating

In its second-quarter earnings, Nvidia reported no H20 sales to China-based customers

CFO Kress also said during the earnings call over the past few weeks, a “select number” of China-based customers received licenses for H20 chips, though none have been shipped based on those licenses

How China’s chips stack up to Nvidia’s There are already some Chinese ducts that outperform Nvidia’s H20, analyst Rasgon said

He said he expects greater competition in the local market to only catalyze chip innovation in China. “Nvidia is never going to be allowed, bably, to sell better parts in China,” Rasgon said. “So for the Chinese, it takes time, but they’re going to work on imving their own stuff

And over time, maybe that gap closes.” Nvidia CEO Jensen Huang has long complained U.S. export controls, saying they will only galvanize local players to innovate in the chipmaker’s absence. “The China market, I’ve estimated to be $50 billion of opportunity for us this year if we were able to address it with competitive ducts,” Huang said during the second-quarter earnings call

But not only does Nvidia look to resume H20 chip sales in China, the company also wants to expand its duct line by introducing the high-performance Blackwell chip in the country, should the U.S. agree. “We continue to advocate for the U.S. government to apve Blackwell for China,” Kress said during the earnings call

The company aims to “win the support of every developer” in highly-competitive , she added, so Nvidia nology can be the world’s gold-standard. “You kind of need a Blackwell chip [in China], even though it’s going to be performance-laden in nature, relative to everything else in the market,” Angelo Zino, SVP and nology equity analyst at CFRA, told Fortune

While Zino said the H20 “bably isn’t going to give you enough to offset or get back the revenue” the company had a couple of quarters ago, introducing a Blackwell chip in China just might

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