China–USA tech race impacting Nvidia: AI, Chips and Geopolitics

Learning outcomes

This case can be used to highlight aspects of strategic management, with special contribution to context of emerging markets as it deals with geopolitical hurdles related to business of Multi National Corporation Nvidia in Chinese market which is an emerging market. This case study focus is on industry analysis as well as global strategy aspects of handling geopolitics. This case study highlights regulatory hurdles in emerging market (China) and competition from Chinese companies. After working through the case and assignment questions, the students will be able to:

The underlined words above are consistent with verbs in Bloom’s taxonomy for the “Understand”, “Analyze”, “Evaluate” and “Create” processes, as described by Forehand, M. (2010). Bloom’s taxonomy. Emerging Perspectives on Learning, Teaching, and Technology, 41(4), 47–56.

Case overview/synopsis

In May 2026, Nvidia a Santa Clara based, US company had become the most valuable company in the world, with a market capitalization of $5.7tn. Once a niche player in graphics cards, it now stood at the centre of the AI ecosystem, powering large language models, data centres and autonomous systems. Yet, as demand for its latest AI chips soared, CEO Huang faced a critical dilemma. Intensifying geopolitical tensions between the USA and China had triggered sweeping export restrictions, cutting Nvidia off from China, one of its largest markets and placing billions in revenue at risk. At the same time, Nvidia’s supply chain remained heavily reliant on Taiwan-head quartered Taiwan Semiconductor Manufacturing Company, exposing it to potential disruption from regional instability. To complicate matters further, tech giants such as Google, Amazon and Microsoft who were major customers were designing their own AI chips, challenging Nvidia’s dominance. While Nvidia’s leadership position in GPUs seemed unshakable in the near term, its vulnerabilities were growing. Huang had reason to be proud but also anxious. The company’s AI chips were in massive demand, but supply constraints and geopolitical fragmentation threatened its future. How should Nvidia under Huang’s leadership respond to rising geopolitical risks and increasing competition by customers and suppliers planning own chip design in a rapidly changing global semiconductor landscape? Huang faced a critical business dilemma. Where should he focus? Compete with competitors like advanced micro devices, Huawei by having technology edge by investing in research & development (R&D) and creating AI ecosystem with proprietary software compute unified device architecture rather than just GPUs? Or diversify customer base from hyperscalers (huge datacentre customers), such as Google, Amazon and Meta, who were trying to build own chips to sovereign AI datacentres being built by Saudi Arabia, India, Japan and other countries? What should be Nvidia’s future strategy to grow in spite of Geopolitical challenges specially between China and USA? How could Nvidia secure its future in a world growing more fragmented, more politicized and more competitive than ever before?

Complexity academic level

This case is intended for students of management at a bachelors or master’s/Master of Business Administration level in a course on strategic management and international business. Within such a course, the case can be positioned in a module on strategy formulation, as it builds on concepts of industry analysis and competition. In international business course it can be positioned in module on geopolitics. As the case provides coverage of multiple fundamental concepts of strategy, it could also be used as an evaluation component.

Subject code

CSS 11: Strategy.