Nvidia Locks In Korean Chip Supplies as China Business Fades to Zero

Nvidia is threading a needle that few companies ever manage: simultaneously securing the next generation of its hardware supply chain while watching its second-largest market shrink to a regulatory cipher. A tour of Asia by CEO Jensen Huang this week yielded concrete supply pacts for the coming Vera Rubin platform, yet at home the company faces a growing enforcement drag that has all but erased China from its near-term revenue outlook.

SK Hynix will supply HBM4 and HBM5 memory modules for Nvidia's Vera Rubin chips, the lifeblood of the company's next AI architecture. Alongside that, SK Telecom has committed to building a gigawatt-scale AI cloud by 2027, and Naver is expanding its own AI infrastructure. Hyundai is pouring $6.6 billion into an "AI Valley" project, and LG is collaborating on humanoid robots. These moves cement Nvidia's grip on the Asian supply chain beyond mere component procurement — they represent an ecosystem in which Nvidia's CUDA software and full-stack "AI factory" model become the only viable scaffolding for sovereign and corporate AI build-outs.

Yet the reality of where those factories can ship their output is tightening by the month. Nvidia now expects zero revenue from China in the second quarter of its fiscal 2027, a market that once contributed almost a quarter of its data center sales. The company's board rejected a Senate Banking Committee invitation from Senator Elizabeth Warren to discuss its China exposure and export control compliance, drawing public sharp criticism from Warren. Behind the political theater, a report from short seller Culper Research alleges that more than 20% of Nvidia's compute revenue in fiscal 2026 flowed to China through illegal chip diversions via Southeast Asian intermediaries — an accusation the company denies. Separately, authorities have uncovered alleged circumvention schemes worth over $670 million in recent months, involving H100 and H200 shipments through Malaysia and Thailand.

The regulatory squeeze is twofold. The U.S. Commerce Department tightened export rules for H200 chips in January 2026, switching from blanket denials to case-by-case reviews that require delivery guarantees and independent security audits — a process that has ground to a near halt. Chinese authorities have simultaneously blocked imports and warned domestic firms away from American AI technology. Huang himself acknowledged last month that Nvidia has effectively ceded the Chinese AI chip market to Huawei, whose local processors now command a 20% share. Nvidia's share of AI accelerator cards in China fell from nearly 95% in 2024 to just 55% last year, according to IDC.

Should investors sell immediately? Or is it worth buying Nvidia?

The shares reflect the tension. At €180.92, the stock is 10.7% below its 2025 peak and has dropped roughly 5.5% over the past week. The sell-off began with a stronger-than-expected U.S. jobs report that dented hopes for near-term rate cuts, but the underlying drag is geopolitical. The 50-day moving average at €175.56 is providing a temporary floor, and analysts argue the pullback is a healthy consolidation. The consensus price target stands at €258.62, implying roughly 43% upside.

A quiet counterweight to the China headache is the surging market for "sovereign AI." Demand for nationally owned, state-funded data centers tripled last year as governments in the U.K., Japan, Saudi Arabia and elsewhere seek to maintain data sovereignty and cultural control. These projects generated $30 billion in revenue for Nvidia in fiscal 2026, roughly 14% of total sales. More importantly, Nvidia no longer sells individual GPUs for these builds; it delivers turnkey "AI factories" that go live in 90 days and are locked into the CUDA ecosystem. The switching costs are enormous, insulating the company from rival AMD or Intel architectures even as the China door slams shut.

On the consumer side, Nvidia used Computex to unveil the RTX Spark Superchip, combining Blackwell graphics with Grace processors. High-end laptops from Dell, ASUS and HP are slated for autumn 2026. But the real narrative pivot comes later in the same year, when the Vera Rubin platform begins its rollout in Q3 — precisely the point at which the HBM4 and HBM5 supply lines secured this week in South Korea become critical.

Nvidia at a turning point? This analysis reveals what investors need to know now.

Nvidia's stock has rallied 45% over the past twelve months, but the volatility is extreme: 43% annualized over the last 30 days. The question investors now face is not whether the company can keep expanding — the pipeline is full — but how long it can grow with an entire market that has been rendered invisible by policy. China hasn't disappeared; it has just gone underground. And until Washington and Beijing reach some new equilibrium, Nvidia's biggest customer will remain a blank line in its forecasts.

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