HONG KONG – Smart cars, rather than artificial intelligence (AI), are seen as Nvidia’s pathway back into the Chinese market, after US export controls have squeezed its sales by as much as USD 4.8 trillion.

According to a Reuters report on Monday (4/5), last week’s Beijing Auto Show (28/4) served as a showcase for carmakers and technology groups to demonstrate their intelligent driving capabilities.

The opportunity in autonomous vehicles offers a bright spot for Nvidia chief executive Jensen Huang, who is currently grappling with geopolitical constraints and intensifying competition.

Last year, Huang estimated that US restrictions on selling advanced chips to Chinese companies had cost Nvidia USD 4.5 billion in writedowns and lost potential revenue worth billions of dollars.

As a consequence of these restrictions, the Financial Times reported on Friday (1/5) that Huawei expects revenue from its AI chips to surge by at least 60% this year, as domestic technology firms seek alternatives to Nvidia.

At the Beijing auto show, Huawei showcased its latest driver assistance system, which the company claims can reduce collision risk by half compared with its predecessor.

Meanwhile, Volkswagen demonstrated an in-car AI agent activated by voice commands, capable of providing navigation guidance and even ordering coffee.

The smart vehicle chip market is expanding rapidly. Research by Sunwah Kingsway shows that by 2025, two-thirds of cars sold in China offered some form of intelligent driving assistance.

TechInsights estimates that the semiconductor market for smart vehicles will nearly double to USD 41 billion by the end of the decade.

Beyond silicon chips, automakers will also require AI-based training, simulation and other software capabilities.

Smart vehicles could also unlock more lucrative opportunities for Nvidia in robotics, which relies on similar hardware and technologies.

Nvidia has already made progress in the smart vehicle sector. BYD and Geely are reportedly set to adopt Nvidia’s Drive Hyperion platform, which integrates chips, computing systems, sensors and software for autonomous driving.

However, Nvidia faces growing competition from chipmakers across multiple markets. Volkswagen’s AI agent, for example, is the result of a collaboration with domestic automotive chip specialist Horizon Robotics.

At the same time, electric vehicle (EV) makers from Xpeng to Nio have made advances in developing their own semiconductors.

In March, Xpeng said it would modify its new models to utilise its in-house Turing chips.

During the Auto China industry exhibition in Beijing in April, Nio chief executive William Li said internally developed chips are expected to improve profitability, with the possibility of selling them to third parties.

This domestic push has weighed on Nvidia’s adoption rates. According to estimates by Bernstein, the use of Nvidia chips in vehicles equipped with Level 2+ driving systems — capable of highway navigation — declined over four months.

Penetration fell from 60% of 350,000 Level 2+ vehicles in July to 41% by December 2025.

Despite the decline in market share, the competition remains in its early stages. Nvidia’s strong balance sheet and scale give it an advantage over smaller rivals.

The US chipmaker could target vehicles aimed at export markets, which may avoid Chinese technology due to national security or data privacy concerns.

Moreover, China’s vehicle exports surged 57% year on year in the first quarter to 2.2 million units, suggesting Nvidia still has significant room for growth in the Chinese market. (SF/ZH)