NVIDIA Stock Faces Backlash as CEO Calls Taiwan a ‘Country’

CEO of NVIDIA Jensen Huang has recently drawn attention for a particular statement. As a response, some Chinese netizens have called for a boycott of NVIDIA.

South China Morning Post reported on June 10 that Huang is under attack from Chinese netizens after he referred to Taiwan as a country at the center of the world’s electronics industry.

Huang recently visited his homeland, Taiwan, to attend a tech conference. While strolling through a night market, he told a local journalist that “Taiwan is at the center of the world’s electronics industry,” and “Furthermore, Taiwan is one of the important countries in the world.”

Chinese netizens who heard this news have strongly opposed Huang’s reference to Taiwan as a separate country. In particular, some netizens have called for a boycott of NVIDIA’s semiconductors.

In response to the controversy, Huang explained, “I did not express my opinion on geopolitical issues. I simply wanted to express my gratitude to all our technology partners in Taiwan for their full support and contributions to NVIDIA over the years.”

Experts analyzed that the immediate clarification from Huang was because China is a major customer of NVIDIA. According to the industry, China is known to account for about a third of NVIDIA’s sales, making it a significant market.

Despite the Biden administration’s recent sanctions on the export of advanced AI chips to China, China is still one of NVIDIA’s biggest customers. It is believed that the clarification was made to prevent further difficulties in exports to China due to the U.S. government’s massive sanctions.

While Huang has recently been receiving attention akin to a popular pop star worldwide due to his impressive achievements, he has not been received as warmly in China. China highly values patriotism and it has been known to launch boycotts and anti-purchase movements in response to such controversies.

China has even applied patriotism to its own companies and launched anti-purchase movements. Nongfu Spring, known as the bottled water company of China, once faced a massive boycott because the chairman’s son was an American citizen and the water bottle packaging contained Japanese-style illustrations.

Meanwhile, Nvidia has seen an increase in short selling. Typically, short sellers flock to stocks that are predicted to fall in price. NVIDIA has recently announced a stock split due to its high share price, resulting in divided expectations.

When a stock split occurs, the share price can skyrocket, but there have also been frequent cases where it increases price volatility. Previously, Tesla conducted its second stock split in 2022, resulting in a disastrous 30% plunge within a month. GameStop also saw its closing price drop by over 6% on the first trading day after the stock split.

NVIDIA has seen a significant rise in its share price over the past few years so it cannot be ruled out that a large amount of profit-taking selling could occur in the short term.

NVIDIA’s short-interest balance stands at about $34 billion. This is nearly 1.5 to 2 times the short interest balances of Apple and Tesla. Furthermore, NVIDIA being investigated by U.S. financial authorities for potential violations of antitrust laws could also be a variable.

The U.S. Department of Justice and the Federal Trade Commission have initiated investigations into companies including NVIDIA, Microsoft Corporation, and OpenAI, considering the possibility that these companies may have restricted competition by leveraging their overwhelming dominance in the AI market. If the violation of antitrust laws is proven, NVIDIA could face hefty fines, leading to evaluations of successive setbacks for the company. However, based on the closing price on the NASDAQ Stock Market on June 10, NVIDIA’s share price rose 0.75% after the stock split.