Adam Spatacco, The Motley Fool
5 min read
In This Article:
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Nearly one-third of Nvidia's business is exposed to China and its neighboring region, Singapore.
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In recent weeks, Nvidia has forged a number of new opportunities with countries in the Middle East.
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While ongoing trade negotiations with China could hurt Nvidia's near-term growth, the company's long-term picture remains intact thanks to its presence beyond the U.S. and China.
On April 2, President Trump gave a commanding speech at the White House during which he outlined a plethora of new tariffs that would be applied to just about every country around the world. In the grand scheme of things, though, there are only a few geographic regions where the President really wants to rebalance trade relations. Chief among these countries is China.
Over the last month and a half, semiconductor powerhouse Nvidia (NASDAQ: NVDA) has been a tangential talking point as it relates to tariff negotiations with China.
Let's explore why China is such an important market for Nvidia. Moreover, I'll outline a number of growth opportunities beyond the region and make a case for why I'm still confident in Nvidia's long-term prospects should its business in China begin to contract.
Per Nvidia's latest 10-K filing, the company's revenue breakdown by geography is as follows:
|
Region |
Revenue ($) |
Revenue (%) |
|---|---|---|
|
United States |
$61.2 billion |
47% |
|
Singapore |
$23.7 billion |
18% |
|
Taiwan |
$20.6 billion |
16% |
|
China (including Hong Kong) |
$17.1 billion |
13% |
|
Other |
$7.9 billion |
6% |
|
Total |
$130.5 billion |
100% |
Data source: Investor Relations.
From the figures above, it would appear that China makes up 13% of Nvidia's total revenue base. However, a footnote in the company's filings may offer a clue as to how much is really at stake here.
Per the notes in the 10-K, "Customers use Singapore to centralize invoicing while our products are almost always shipped elsewhere." Piggybacking off these details, there have been a number of reports that suggest much of Nvidia's products that are routed through Singapore end up in China.
For the sake of this analysis, I'll lump Singapore and China together -- implying that up to roughly 31% of Nvidia's revenue could face some serious headwinds depending on the outcome of U.S. trade negotiations with China and how new policies could impact export controls.
I'm not going to deny that Nvidia's exposure to China and neighboring countries isn't a risk. The silver lining I see from the financial profile above is that other regions of the world could emerge as new growth opportunities for Nvidia and perhaps eclipse the company's current business in China. Let's explore some recent developments involving Nvidia and other countries outside of China.
