It was reported earlier this week that US chipmaker Nvidia has soundly exceeded analysts' expectations regarding sales revenue, especially in its semiconductor business, while expressing concern over the US government's plans to curb artificial intelligence-related chip competitiveness in China.
However, the same could not be said for its automotive business due to the Chinese demand for electric vehicles (EV) moderating in the past quarter.
It was revealed by CNBC the company's automotive operation primarily sells chip systems for assisted driving, with Nvidia CEO Jensen Huang claiming it would become the firm's "next billion-dollar business."
Nvidia's Automotive Business Plateaus Due to EV Surplus
In Nvidia's latest earnings call for Q2 2023, there was no mention of the business after it fell by 15% from the previous quarter, the first sequential decline in more than a year.
The segment's figure was also below Wall Street's $309.3 million forecast as it only achieved $253 million.
"The sequential decrease primarily reflects lower overall auto demand, particularly in China," Nvidia CFO Colette Kress said in a statement on the quarterly results. She added the demand for self-driving systems helped automotive revenue grow by 15% from the previous year.
Given its large population, China is the world's largest auto market and has become a driver of the global push toward electric cars with local players like BYD and Xpeng partially giving traditional automakers a run for their money by playing up technological features.
Counterpoint Research associate director Brady Wang said Nvidia primarily caters to local Chinese EV manufacturers, adding that the sequential automotive revenue decline could be the result of excess inventory among Chinese manufacturers, as well as their downward revisions of sales forecasts for high-end vehicles in the coming two quarters.
Ex-Xpeng exec Wu Xinzhou Joins Nvidia
Meanwhile, Xpeng's former head of autonomous driving, Wu Xinzhou, announced on social media Thursday (August 24) that he would be starting a new job at Nvidia the next day (Friday, August 25). The announcement was accompanied by an attached photo of him alongside Xpeng CEO He Xiaopeng and Nvidia's Huang.
He did not disclose what role he would take up at Nvidia, but Chinese media outlet Jiemian News said he would become its head of automotive products.
No source for the news was provided.