Connect with us

Business

Nvidia CEO Huang calls China AI market a $50B opportunity

Published

3 months ago

on


It may take some time for Nvidia to see the upside from U.S. President Donald Trump’s unprecedented offer to allow AI chip sales to China in exchange for a 15% cut. 

The deal could shake up an export control regime designed to maintain the U.S.’s edge in strategic technologies. Officials like Treasury Secretary Scott Bessent are already positioning the arrangement as a model for other companies hoping to sell sensitive technology to China.

But during Nvidia’s earnings call on Wednesday, CFO Colette Kress noted that while the U.S. government has expressed an “expectation” that it would get 15% of Nvidia’s H20 revenue, it “has not published a regulation codifying such requirement.”

In a later exchange filing, Nvidia warned that “any request for a percentage of the revenue by the USG may subject us to litigation, increase our costs, and harm our competitive position and benefit competitors that are not subject to such arrangements.”

The U.S.-China tech war casts a shadow on Nvidia’s otherwise surging business. The company dropped China sales from its forecast, and its 10-Q filing includes a litany of warnings about regulatory scrutiny from both Washington and Beijing. 

And that’s a worry for Nvidia and its access to what CEO Jensen Huang described Wednesday as a $50 billion opportunity in the “second-largest computing market in the world.” Nvidia’s chips may be the world’s best AI processors—but Chinese competitors are catching up.

Nvidia reported $46.7 billion in quarterly revenue, a 56% jump year on year, even as Nvidia revealed that it didn’t ship any H20s to Chinese customers last quarter. Quarterly profit also jumped by 59% to hit $26.4 billion. 

The company forecast $54 billion in revenue for the next quarter, which would represent a more than 50% jump from the same period a year earlier. 

Nvidia did not include possible H20 sales to China as part of its forecast, citing “geopolitical issues.”  Yet in her remarks, Kress said the company could see as much as $5 billion in H20 revenue in the coming quarter if geopolitical issues recede. “Every licensed sale we make will benefit the U.S. economy,” she said. 

Sales to customers that use China as a billing location dropped to $2.8 billion, down from $3.7 billion a year ago. 

Revenue from customers that invoice in Singapore rose 80% to $10.1 billion. In its stock filing, Nvidia clarified that revenue booked to Singapore involves products that are “almost always shipped elsewhere,” and added that 99% of its “controlled data center compute revenue” billed to Singapore came from U.S.-based customers last quarter.

Nvidia has been barred from selling its leading AI processors to China since 2022. Huang has been a longtime critic of U.S. export controls, complaining that they will instead encourage the growth of domestic Chinese alternatives and freeze U.S. companies out of the market. 

In April, Nvidia revealed that it would need a license to sell the H20 processor, its latest attempt to make a processor that complies with U.S. law, to China. Then, in late July, the Trump administration reversed course: As part of its trade war truce with China, the U.S. signaled that it might allow H20 sales in China.

Shares slump

Despite the more than 50% jump in revenue, Nvidia shares dropped by 3.1% in extended trading, as data center revenue, at $41 billion, missed some of the more bullish estimates from analysts. 

Asian tech had a mixed reaction to Nvidia’s earnings. Taiwan Semiconductor Manufacturing Co. fell by 2.5%. Foxconn, which makes AI services, dropped by 1.0%.

Yet SK Hynix, a Korean supplier of high-bandwidth memory to Nvidia, jumped by 3.3%. Tokyo Electron, a major manufacturer of chipmaking equipment, rose by 1.9%.

Chinese tech companies performed poorly. Alibaba plunged by 4.4%, though negative sentiment may have been owing to concerns over a fierce and expensive fight over food-delivery market share with Meituan and JD.com. Baidu, another leading Chinese AI developer, fell by 1.3%. 

But Chinese chipmakers, increasingly viewed as real competitors to Nvidia’s AI chips—at least in China—performed well in Thursday trading. Semiconductor Manufacturing International Corp., China’s national champion chipmaker, rose by 10.4%. Cambricon, another local AI chipmaker, surged by 15.7%, and surpassed Kweichou Moutai as China’s most expensive stock. 

Greater competition

In its stock filing, Nvidia gave another stark warning about its competitive position in China going forward. “We may be unable to create a competitive product for China’s data center market that receives approval from the USG,” it warned. “In that event, we would effectively be foreclosed from competing in China’s data center computing/compute market.”

Nvidia’s products—including its “fourth-best” H20 processor—are still ahead of what Chinese companies can produce. Yet domestic chipmakers, like Huawei and its Ascend chips, are starting to catch up, and more important, may soon offer better products than what Nvidia or its peers are allowed to sell in China. 

Qilai Shen—Bloomberg via Getty Images

Beijing would be quite happy for Chinese companies to buy local alternatives. Earlier this month, both Bloomberg and the Financial Times reported that Chinese officials were pushing local companies, particularly those affiliated with the government, to halt their purchases of Nvidia chips. Officials have questioned whether Nvidia’s China chips pose a security risk, following U.S. discussions of including back doors and kill switches in Nvidia products to combat chip smudging. 

Nvidia strongly denies including any such back doors in its products, and Huang has reiterated that Nvidia’s chips do not pose a threat to Chinese national security.

In its stock filing, Nvidia pointed out that China could exert its own regulatory pressure on the company, pointing to an antitrust investigation launched last year into its 2020 acquisition of Mellanox. (Beijing has often used antitrust measures as a way to retaliate against U.S. export controls). Beijing officials are also asking whether complying with U.S. export controls constitutes discrimination against Chinese customers. 

China’s $50 billion opportunity

On Wednesday, Huang suggested that China could offer Nvidia a $50 billion opportunity for the year, “if we were able to address it with competitive products.”

U.S. tech shares have recovered since January’s DeepSeek shock, but China’s open-source models from companies like Alibaba, Moonshot AI, Z.ai, and DeepSeek have continued to impress outside observers. And it’s helped boost Chinese shares: Hong Kong’s Hang Seng Index is up by more than 25% for the year, compared with 10% for the S&P 500.

China’s embrace of open-source models is also changing how U.S. developers approach AI. In recent weeks, both OpenAI and xAI have released open-source versions of their proprietary models; OpenAI CEO Sam Altman even pointed to China as the reason behind his company’s return to open-source. 

“The vast majority of the leading open-source markets are created in China, and so it’s fairly important, I think, for the American technology companies to be able to address that market,” Huang said Wednesday. “The open-source models that have come out of China are really excellent.”

Earlier this month, Trump suggested that he was open to Nvidia selling a version of its powerful Blackwell processor to the Chinese market. CEO Jensen Huang previously confirmed that discussions were taking place, and on Wednesday’s earnings call said, “The opportunity for us to bring Blackwell to the China market is a real possibility.

“We just have to keep advocating for 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 said. 

Nvidia may have less time than Huang hopes. Last week, DeepSeek unveiled V3.1, the latest version of its AI model—with a special feature that optimizes performance on Chinese-made chips. 



Source link

Related Topics:
Continue Reading

Business

Senate Dems’ plan to fix Obamacare premiums adds nearly $300 billion to deficit, CRFB says

Published

3 hours ago

on

December 5, 2025

By



The Committee for a Responsible Federal Budget (CRFB) is a nonpartisan watchdog that regularly estimates how much the U.S. Congress is adding to the $38 trillion national debt.

With enhanced Affordable Care Act (ACA) subsidies due to expire within days, some Senate Democrats are scrambling to protect millions of Americans from getting the unpleasant holiday gift of spiking health insurance premiums. The CRFB says there’s just one problem with the plan: It’s not funded.

“With the national debt as large as the economy and interest payments costing $1 trillion annually, it is absurd to suggest adding hundreds of billions more to the debt,” CRFB President Maya MacGuineas wrote in a statement on Friday afternoon.

The proposal, backed by members of the Senate Democratic caucus, would fully extend the enhanced ACA subsidies for three years, from 2026 through 2028, with no additional income limits on who can qualify. Those subsidies, originally boosted during the pandemic and later renewed, were designed to lower premiums and prevent coverage losses for middle‑ and lower‑income households purchasing insurance on the ACA exchanges.

CRFB estimated that even this three‑year extension alone would add roughly $300 billion to federal deficits over the next decade, largely because the federal government would continue to shoulder a larger share of premium costs while enrollment and subsidy amounts remain elevated. If Congress ultimately moves to make the enhanced subsidies permanent—as many advocates have urged—the total cost could swell to nearly $550 billion in additional borrowing over the next decade.

Reversing recent guardrails

MacGuineas called the Senate bill “far worse than even a debt-financed extension” as it would roll back several “program integrity” measures that were enacted as part of a 2025 reconciliation law and were intended to tighten oversight of ACA subsidies. On top of that, it would be funded by borrowing even more. “This is a bad idea made worse,” MacGuineas added.

The watchdog group’s central critique is that the new Senate plan does not attempt to offset its costs through spending cuts or new revenue and, in their view, goes beyond a simple extension by expanding the underlying subsidy structure.

The legislation would permanently repeal restrictions that eliminated subsidies for certain groups enrolling during special enrollment periods and would scrap rules requiring full repayment of excess advance subsidies and stricter verification of eligibility and tax reconciliation. The bill would also nullify portions of a 2025 federal regulation that loosened limits on the actuarial value of exchange plans and altered how subsidies are calculated, effectively reshaping how generous plans can be and how federal support is determined. CRFB warned these reversals would increase costs further while weakening safeguards designed to reduce misuse and error in the subsidy system.

MacGuineas said that any subsidy extension should be paired with broader reforms to curb health spending and reduce overall borrowing. In her view, lawmakers are missing a chance to redesign ACA support in a way that lowers premiums while also improving the long‑term budget outlook.

The debate over ACA subsidies recently contributed to a government funding standoff, and CRFB argued that the new Senate bill reflects a political compromise that prioritizes short‑term relief over long‑term fiscal responsibility.

“After a pointless government shutdown over this issue, it is beyond disappointing that this is the preferred solution to such an important issue,” MacGuineas wrote.

The off-year elections cast the government shutdown and cost-of-living arguments in a different light. Democrats made stunning gains and almost flipped a deep-red district in Tennessee as politicians from the far left and center coalesced around “affordability.”

Senate Minority Leader Chuck Schumer is reportedly smelling blood in the water and doubling down on the theme heading into the pivotal midterm elections of 2026. President Donald Trump is scheduled to visit Pennsylvania soon to discuss pocketbook anxieties. But he is repeating predecessor Joe Biden’s habit of dismissing inflation, despite widespread evidence to the contrary.

“We fixed inflation, and we fixed almost everything,” Trump said in a Tuesday cabinet meeting, in which he also dismissed affordability as a “hoax” pushed by Democrats.​

Lawmakers on both sides of the aisle now face a politically fraught choice: allow premiums to jump sharply—including in swing states like Pennsylvania where ACA enrollees face double‑digit increases—or pass an expensive subsidy extension that would, as CRFB calculates, explode the deficit without addressing underlying health care costs.



Source link

Continue Reading

Business

Netflix–Warner Bros. deal sets up $72 billion antitrust test

Published

3 hours ago

on

December 5, 2025

By



Netflix Inc. has won the heated takeover battle for Warner Bros. Discovery Inc. Now it must convince global antitrust regulators that the deal won’t give it an illegal advantage in the streaming market. 

The $72 billion tie-up joins the world’s dominant paid streaming service with one of Hollywood’s most iconic movie studios. It would reshape the market for online video content by combining the No. 1 streaming player with the No. 4 service HBO Max and its blockbuster hits such as Game Of Thrones, Friends, and the DC Universe comics characters franchise.  

That could raise red flags for global antitrust regulators over concerns that Netflix would have too much control over the streaming market. The company faces a lengthy Justice Department review and a possible US lawsuit seeking to block the deal if it doesn’t adopt some remedies to get it cleared, analysts said.

“Netflix will have an uphill climb unless it agrees to divest HBO Max as well as additional behavioral commitments — particularly on licensing content,” said Bloomberg Intelligence analyst Jennifer Rie. “The streaming overlap is significant,” she added, saying the argument that “the market should be viewed more broadly is a tough one to win.”

By choosing Netflix, Warner Bros. has jilted another bidder, Paramount Skydance Corp., a move that risks touching off a political battle in Washington. Paramount is backed by the world’s second-richest man, Larry Ellison, and his son, David Ellison, and the company has touted their longstanding close ties to President Donald Trump. Their acquisition of Paramount, which closed in August, has won public praise from Trump. 

Comcast Corp. also made a bid for Warner Bros., looking to merge it with its NBCUniversal division.

The Justice Department’s antitrust division, which would review the transaction in the US, could argue that the deal is illegal on its face because the combined market share would put Netflix well over a 30% threshold.

The White House, the Justice Department and Comcast didn’t immediately respond to requests for comment. 

US lawmakers from both parties, including Republican Representative Darrell Issa and Democratic Senator Elizabeth Warren have already faulted the transaction — which would create a global streaming giant with 450 million users — as harmful to consumers.

“This deal looks like an anti-monopoly nightmare,” Warren said after the Netflix announcement. Utah Senator Mike Lee, a Republican, said in a social media post earlier this week that a Warner Bros.-Netflix tie-up would raise more serious competition questions “than any transaction I’ve seen in about a decade.”

European Union regulators are also likely to subject the Netflix proposal to an intensive review amid pressure from legislators. In the UK, the deal has already drawn scrutiny before the announcement, with House of Lords member Baroness Luciana Berger pressing the government on how the transaction would impact competition and consumer prices.

The combined company could raise prices and broadly impact “culture, film, cinemas and theater releases,”said Andreas Schwab, a leading member of the European Parliament on competition issues, after the announcement.

Paramount has sought to frame the Netflix deal as a non-starter. “The simple truth is that a deal with Netflix as the buyer likely will never close, due to antitrust and regulatory challenges in the United States and in most jurisdictions abroad,” Paramount’s antitrust lawyers wrote to their counterparts at Warner Bros. on Dec. 1.

Appealing directly to Trump could help Netflix avoid intense antitrust scrutiny, New Street Research’s Blair Levin wrote in a note on Friday. Levin said it’s possible that Trump could come to see the benefit of switching from a pro-Paramount position to a pro-Netflix position. “And if he does so, we believe the DOJ will follow suit,” Levin wrote.

Netflix co-Chief Executive Officer Ted Sarandos had dinner with Trump at the president’s Mar-a-Lago resort in Florida last December, a move other CEOs made after the election in order to win over the administration. In a call with investors Friday morning, Sarandos said that he’s “highly confident in the regulatory process,” contending the deal favors consumers, workers and innovation. 

“Our plans here are to work really closely with all the appropriate governments and regulators, but really confident that we’re going to get all the necessary approvals that we need,” he said.

Netflix will likely argue to regulators that other video services such as Google’s YouTube and ByteDance Ltd.’s TikTok should be included in any analysis of the market, which would dramatically shrink the company’s perceived dominance.

The US Federal Communications Commission, which regulates the transfer of broadcast-TV licenses, isn’t expected to play a role in the deal, as neither hold such licenses. Warner Bros. plans to spin off its cable TV division, which includes channels such as CNN, TBS and TNT, before the sale.

Even if antitrust reviews just focus on streaming, Netflix believes it will ultimately prevail, pointing to Amazon.com Inc.’s Prime and Walt Disney Co. as other major competitors, according to people familiar with the company’s thinking. 

Netflix is expected to argue that more than 75% of HBO Max subscribers already subscribe to Netflix, making them complementary offerings rather than competitors, said the people, who asked not to be named discussing confidential deliberations. The company is expected to make the case that reducing its content costs through owning Warner Bros., eliminating redundant back-end technology and bundling Netflix with Max will yield lower prices.



Source link

Continue Reading

Business

The rise of AI reasoning models comes with a big energy tradeoff

Published

4 hours ago

on

December 5, 2025

By



Nearly all leading artificial intelligence developers are focused on building AI models that mimic the way humans reason, but new research shows these cutting-edge systems can be far more energy intensive, adding to concerns about AI’s strain on power grids.

AI reasoning models used 30 times more power on average to respond to 1,000 written prompts than alternatives without this reasoning capability or which had it disabled, according to a study released Thursday. The work was carried out by the AI Energy Score project, led by Hugging Face research scientist Sasha Luccioni and Salesforce Inc. head of AI sustainability Boris Gamazaychikov.

The researchers evaluated 40 open, freely available AI models, including software from OpenAI, Alphabet Inc.’s Google and Microsoft Corp. Some models were found to have a much wider disparity in energy consumption, including one from Chinese upstart DeepSeek. A slimmed-down version of DeepSeek’s R1 model used just 50 watt hours to respond to the prompts when reasoning was turned off, or about as much power as is needed to run a 50 watt lightbulb for an hour. With the reasoning feature enabled, the same model required 7,626 watt hours to complete the tasks.

The soaring energy needs of AI have increasingly come under scrutiny. As tech companies race to build more and bigger data centers to support AI, industry watchers have raised concerns about straining power grids and raising energy costs for consumers. A Bloomberg investigation in September found that wholesale electricity prices rose as much as 267% over the past five years in areas near data centers. There are also environmental drawbacks, as Microsoft, Google and Amazon.com Inc. have previously acknowledged the data center buildout could complicate their long-term climate objectives. 

More than a year ago, OpenAI released its first reasoning model, called o1. Where its prior software replied almost instantly to queries, o1 spent more time computing an answer before responding. Many other AI companies have since released similar systems, with the goal of solving more complex multistep problems for fields like science, math and coding.

Though reasoning systems have quickly become the industry norm for carrying out more complicated tasks, there has been little research into their energy demands. Much of the increase in power consumption is due to reasoning models generating much more text when responding, the researchers said. 

The new report aims to better understand how AI energy needs are evolving, Luccioni said. She also hopes it helps people better understand that there are different types of AI models suited to different actions. Not every query requires tapping the most computationally intensive AI reasoning systems.

“We should be smarter about the way that we use AI,” Luccioni said. “Choosing the right model for the right task is important.”

To test the difference in power use, the researchers ran all the models on the same computer hardware. They used the same prompts for each, ranging from simple questions — such as asking which team won the Super Bowl in a particular year — to more complex math problems. They also used a software tool called CodeCarbon to track how much energy was being consumed in real time.

The results varied considerably. The researchers found one of Microsoft’s Phi 4 reasoning models used 9,462 watt hours with reasoning turned on, compared with about 18 watt hours with it off. OpenAI’s largest gpt-oss model, meanwhile, had a less stark difference. It used 8,504 watt hours with reasoning on the most computationally intensive “high” setting and 5,313 watt hours with the setting turned down to “low.” 

OpenAI, Microsoft, Google and DeepSeek did not immediately respond to a request for comment.

Google released internal research in August that estimated the median text prompt for its Gemini AI service used 0.24 watt-hours of energy, roughly equal to watching TV for less than nine seconds. Google said that figure was “substantially lower than many public estimates.” 

Much of the discussion about AI power consumption has focused on large-scale facilities set up to train artificial intelligence systems. Increasingly, however, tech firms are shifting more resources to inference, or the process of running AI systems after they’ve been trained. The push toward reasoning models is a big piece of that as these systems are more reliant on inference.

Recently, some tech leaders have acknowledged that AI’s power draw needs to be reckoned with. Microsoft CEO Satya Nadella said the industry must earn the “social permission to consume energy” for AI data centers in a November interview. To do that, he argued tech must use AI to do good and foster broad economic growth.



Source link

Continue Reading

Trending

Copyright © Miami Select.