Name: Nvidia’s China dilemma: Analyst warns of high stakes balancing act
Uploaded: 2025-11-03T02:52:30.233Z
Duration: 4 min 56 s
Description: Trent Masters of Alphinity Investment Management joins CNBC’s Squawk Box Asia to discuss Nvidia’s delicate balancing act as it navigates U.S.-China tech tensions while focusing on the Chinese market.

Trent Masters of Alphinity Investment Management joins CNBC’s Squawk Box Asia to discuss Nvidia’s delicate balancing act as it navigates U.S.-China tech tensions while focusing on the Chinese market.

California

Nvidia is contending with shifting US export regulations that limit the sale of its most advanced chips to China, while China continues to develop its own domestic alternatives. Analysts note that the US aims to keep a technological lead of 12 to 24 months over China, but must also ensure that Nvidia's products remain attractive enough to prevent China from fully pivoting to local suppliers.

The Chinese market accounts for approximately 20 to 25 percent of Nvidia's sales, making it a crucial region for the company. The broader AI sector continues to see strong demand, but analysts warn that the industry is moving up the risk curve, with significant investments and potential volatility ahead.

Nvidia’s China dilemma: Analyst warns of high stakes balancing act

The story and the narrative has changed probably about two or three times in the last week at one point There was speculation that Nvidia was allowed to what's going to be allowed to put their most advanced chips in I think that's now been scaled back to a virgin the version that may be better than the h20 But certainly isn't leading edge. I think I think personally I'd be surprised if China got access to the absolute leading edge I think where it lands is that just providing China access to the h20 isn't enough given some of the internal innovations You're seeing from China if you do stick just purely to the h20 They can probably start to get some internal chips from domestic suppliers that are as good So I think you do have to constantly evolve what is allowed in there But I would expect the US to always try and remain So, you know 12 to 24 months ahead of China when it comes to those absolute leading chips So you can try and lead in terms of that AI race Yeah talking about you know, maintaining the US advantage and not not to get too geeky here But since you raised the h20 the chip that could be in play is something called the b30 a which is about faster than the h20 right and would allow China or rather would narrow the US lead from Substantially over China, which is why a lot of folks in Washington or not too keen to see that happen But the flip side is even if President Trump allows China to have b30 a's Right much more powerful What if China says? No, thanks. We're gonna do it ourselves or into this whole DIY Self-reliance thing with technology that's been made pretty clear by Xi Jinping I'm really curious. What happens to a company like Nvidia? Yeah, well look that that Chinese market is still very important to them on a normalized basis It probably represents 20 to 25 percent of their sales. So China is an important market It really is. It's quite an interesting dance It's going on at the moment whereby the u.s Has to allow China to have access to capabilities that they can't quite replicate internally while also keeping them behind the leading edge And so that's why you've got to migrate from the h20 Given what Nvidia has planned when you move to to Rubin and beyond that you expect that the u.s Capabilities will skip ahead again but at the same time you want to make sure the ecosystem does run on Nvidia and Doesn't allow China to create their own platform that then they export to the rest of the world So it's just very very fine balance between making sure that what they can get is better than what they can get Domestically in terms of the Chinese while also trying to maintain That degree of leadership in terms of what the u.s. Companies can build on top of so they're very finely balanced Martin It's very interesting that I think Nvidia does need access on going to that Chinese market given It does represent a quite a proportion of their sales on an ongoing basis All right And we're sort of almost obliged to ask a trend on this whole question of whether or not we are in an AI bubble or Not, where do you land? Yeah, look, I'd love to give you a definitive answer Martin, but there really are competing narrative So, you know if you first of all have a look at the demand side We see the weekly active users from open AI can continue to escalate I think they're at 800 million now You have a look at the token growth, which is indicative of how much these our models are being used on the Google call So not the child mentioned in our 1.3 quadrillion on a monthly basis, which you know, you're starting to talk about quadrillions They're pretty massive numbers so you can see that underlying demand is definitely there. I know I use it more and more every day On the other side, we all have lived through the arc of history We've all seen things like this before Whether that's you know The tech wreck whether it was even building out the railways and what we're seeing now in terms of that AI trade is that I'd say it's still on and we still have quite a few exposures in that AI market But you need to be aware that we are going up the risk curve We're going from it being viewed built purely in terms of the free cash coming off the hyperscalers To now relying on people raising debt whether that's Oracle or core wave and then you've also got I'm sure you've heard a hundred times Just that some of that circularity of the deals. It's now ongoing and key amongst it this all hangs off open AI given the nature of the Agreements that they've struck and how much of a ramp they've put under pretty much any company that they've mentioned They're working with now in terms of the quantum that's required I think the last numbers I saw from open AI They'll burn about a hundred and sixteen billion dollars before turning cash flow positive And since then they've committed to about another 1.3 trillion dollars worth of build-out for a company That'll probably do about 15 maybe 20 billion dollars in revenue this year So, you know, I'm certainly not calling the end of it because it is real The inflection is there in terms of activity, but we are moving up the risk curve in terms of risk So what we're trying to do is just make sure we have a complete awareness of the amount of AI exposure in the portfolio and just having an awareness of those correlations because In the arc of history, there probably will be another deep-seek moment at some point

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