Today:
The world's most valuable company just admitted it lost a country.
And the stock went up anyway.
Coffee at the ready…
The Big Sip
NVIDIA has surrendered the Chinese chip market to Huawei, and Jensen Huang said so out loud.
The CEO told CNBC last week his firm had "largely conceded" China, even as Nvidia posted an 85% revenue jump and an $80 billion buyback. China once bought a fifth of Nvidia's data centre chips; now Huang plans for none of it.
The chips were always the easy part to lose.
What China just took from Nvidia is harder to win back (and a scrappy Chinese lab handed it over).
Here’s Your Brew
Washington's logic was simple.
Cut off Nvidia's best chips, slow China's AI, keep the lead. Two years on, the receipts read differently. Huawei's AI chip revenue is tipped to hit $12 billion this year, up from $7.5 billion in 2025.
A market America tried to freeze is thawing fast (just not for American ones).
The trigger came in April 2025, when the Trump administration told Nvidia it needed a licence to sell advanced chips into China.
Booked orders evaporated. NVIDIA ate a $4.5 billion inventory charge. Beijing, meanwhile, told its own cloud giants to buy local.
And they did.
Then came the part Washington didn't price in.
DeepSeek, China's frontier AI lab, tuned its new V4 model to run on Huawei's Ascend chips and gave Huawei early access while freezing out Nvidia. The point: Nvidia's true lock-in was never silicon. It was CUDA, the software every AI developer learns on.
Huawei's CANN framework is the off-ramp, and DeepSeek just drove down it.
Huang says the quiet part plainly now:
Huawei is "very, very strong," and Nvidia has "evacuated that market."
The numbers still flatter Nvidia:
Record quarter, fat buyback, one of the most valuable companies on Earth.
But a fifth of the world's AI demand now learns on someone else's tools.
Two Sides, One Mug
Pro: Export controls deny China access to the very best chips and maintain a real performance gap — US silicon still runs roughly 5x faster.
Con: The controls handed Huawei a captive market and a reason to build the software stack that breaks Nvidia's grip for good.
Our read: A wall that slows your rival and funds their workaround is a wall that pays for itself (on the wrong side).
Receipt of the Day
[Report] U.S. SEC — "Nvidia Form 10-Q, FY2026"
NVIDIA booked a $4.5bn charge on H20 chips it could no longer sell, and reports zero revenue so far from its licensed H200 path into China.
Why it matters: it's the loss in Nvidia's own words to regulators — not a headline, the filing.
Spit Take
NVIDIA's China chip share: from 95% to near zero.
Extra Curricular Coffee Break Links
Tom's Hardware — DeepSeek's V4 runs on Huawei silicon — The clearest sign yet China can build frontier AI without US chips.
CNN — Google rebuilds the search bar around AI — The same race Nvidia's fighting, fought one layer up: who owns the AI front door.
Semafor — Nvidia servers hit $1m on China's grey market — Controls didn't kill the demand. They just drove it underground, at double the price.
Mugshot Poll 📊
Did export controls work?
Yes — they bought America time.
No — they built Huawei.
Ask me in 2027.
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