The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, May 4 (Reuters Breakingviews) - Smart cars, rather than artificial intelligence, may be Nvidia's ticket back into China. Washington's export controls have throttled the $4.8 trillion chipmaker's sales there. But the rise of autonomous driving in the world's largest car market suggests the U.S. firm can't be written out of the People's Republic yet.

At this year's Beijing auto show, which opened to the public on Tuesday, carmakers and tech groups showcased their intelligent driving capabilities. Volkswagen touted an in-car voice-activated AI agent that can provide driving directions and order coffee, among other tasks. Local champion Huawei celebrated its new assisted driving system which the company reckons can reduce the risk of collisions by half compared to its predecessor.

That's promising for Nvidia boss Jensen Huang, who is grappling with geopolitical barriers and rising competition in the People's Republic. Last year, he estimated that U.S. restrictions on selling cutting-edge chips to Chinese firms cost the company $4.5 billion in writedowns and potentially billions of dollars more in forgone revenue. This year, Huawei expects revenue from its AI chips to ​jump at least 60% ‌as local tech companies seek out alternatives to Nvidia, the Financial Times reported on Friday.

In 2025, two thirds of cars sold in China already offered driving assistance, per Sunwah Kingsway research. The semiconductor market for intelligent cars is forecast to nearly double to $41 billion by the end of the decade, according to research firm TechInsights. Beyond silicon, automakers will also need AI-based training, simulation and other software too. For Nvidia, smart cars might open up an even more lucrative opportunity in robotics, which shares similar hardware and tech.

The U.S. firm has made some headway. BYD and Geely, for example, will both use Nvidia’s Drive Hyperion platform, combining chips, computers, sensors and software for autonomous vehicles, the chipmaker said in March. But local rivals are ramping up their efforts too. Volkswagen's AI agent was created in collaboration with a domestic auto-chip specialist, the $13.6 billion Horizon Robotics. At the same time, EV manufacturers from Xpeng to Nio have made in-roads in self-developed semiconductors. In July, Nvidia's chips were in over 60% of some 350,000 cars with Level 2+ driving systems that are capable of handling highway navigation; that figure slipped to 41% in December, Bernstein estimates.

It's still early days and Nvidia's deep pockets and scale put it ahead of smaller peers. The U.S. company can target brands that want to sell abroad but face concerns over Chinese technology on national security or privacy grounds. The country's auto exports soared 57% year-on-year in the first quarter to 2.2 million vehicles. Nvidia still has plenty of road left to run in China.

Follow Katrina Hamlin on Bluesky and LinkedIn.

CONTEXT NEWS

Carmaker Nio aims for its self-developed chips to improve the company’s profitability and is open to selling them to third parties, CEO William ‌Li said on April 24, on the sidelines of the Auto China industry show in Beijing.

Separately, Xpeng is transitioning its own brand’s new models to use the Turing chips which it developed in-house, the company said on March 20.

Chinese carmakers BYD and Geely will both use Nvidia’s Drive Hyperion platform, combining chips, computers, sensors and software for autonomous vehicles, the chipmaker said on March 16.