Nvidia: The China question will weigh on business for some time
Justin Sullivan

Nvidia (NASDAQ:NVDA) officials said Wednesday that new U.S. restrictions on the sale of some semiconductor technologies to China impacted the company's third-quarter revenue and will continue to weigh on sales for the near term.
Speaking on a conference call to discuss Nvidia's (NVDA) and outlook, Chief Financial Officer Collette Kress said the new restrictions impacted the company's A100 and new H100 data center graphic processors, in particular. However, Kress said that the restrictions on those products were "largely offset by sales of alternative products into China."
Nvidia (NVDA) saw a big decline in its gaming business, as Kress said gaming sales fell 51% from a year to, to $1.57B. Kress said the company was still dealing with increased inventory levels, and that "macro-economic conditions and Covid lockdowns in China continue to weigh on consumer demand." 
Kress added that Nvidia (NVDA) expects data center revenue to also see "more softness" in China, but to continue to grow on an overall basis. Data center sales were a strong point for Nvidia (NVDA) during its third quarter, as sales rose 31% from a year ago, to $3.83B.
"Our data center business is indexed to two fundamental dynamics," said Nvidia (NVDA) Chief Executive Jensen Huang. "General purpose computing is no longer scaling, and we are seeing surging demand in certain area of AI (artificial intelligence)."
Kress added that Nvidia's (NVDA) gross margins during its third quarter were also impacted by an inventory charge of $702M that was largely due to "lower data center demand in China."
Nvidia (NVDA) shares edged upward in after-hours trading following the company's report and outlook. However, Nvidia (NVDA) and many other leading chip stocks, had an overall rough day Wednesday as memory chipmaker Micron Technology (MU) said it would cut its capital spending plans next year.
Separately, Nvidia (NVDA) on Wednesday said it would work on a "massive" new cloud AI supercomputer over the next few years.