China’s semiconductor industry has a chip on its shoulder — and Nvidia may pay the price.

In its second-quarter earnings report on Wednesday, the chip-designing king continued to push the upper limits of eye-popping financial sums — revenue beat estimates and soared 56% year-over-year to $46.7 billion, in case you needed a reminder why Nvidia is the $4 trillion company. But the quarter may just mark the start of a new era, as Nvidia’s business in China continues to be complicated by trade tensions and the rise of Chinese rivals.

Red Light, Green Light, Yellow Light

When the Trump administration barred Nvidia from selling its somewhat watered-down H20 chips to Chinese clients this year, Nvidia responded by arguing that what’s good for Nvidia is good for America — and bad for China, which would have little reason to innovate if it had access to Nvidia’s products. The lobbying worked, though maybe too well. In July, the White House gave the company the go-ahead to resume selling the chip in China (albeit with the caveat that the US government would get a 15% cut of the proceeds), but shortly thereafter, Reuters reported that the Chinese government was discouraging domestic companies from purchasing the H20 chip anyhow.

The result? Nvidia reported zero sales of the H20 chip to China in the second quarter, which ended July 27. It’s just the latest sign of China’s decreasing dependence on the Santa Clara, California-based titan. At a conference in May, Nvidia CEO Jensen Huang said the company’s Chinese market share had decreased from about 95% to just 50% over the past four years.

Nvidia’s lack of H20 sales in China came as its chief rival there turned in a stellar performance:

• Late Tuesday, the Chinese chip designer Cambricon reported a record profit for the first half of the year, driven by nearly $403 million in revenue.
• That’s a mere couple of potato chips compared with rival Nvidia’s mountain of potato sacks, but it represents a 4,000% year-over-year increase nonetheless. The company’s share price has doubled so far this year, with its market cap surging to around $80 billion according to S&P Capital IQ.

The Fab Few: It’s not just in the chip design space that China is gaining ground, either. On Tuesday, sources told the Financial Times that the country aims to triple its AI chipmaking capacity next year. Construction of a fabrication plant that will make Huawei processors could come online by the end of the year, with two more scheduled to go online next year (according to the FT, it’s unclear who owns these fab plants, though Huawei did deny ownership). In other words: China wants a chip industry all its own. Though Nvidia, it seems, could hardly care. In addition to the revenue jump, the company reported net income grew 59% from the previous year to more than $26 billion, with gross margins on a non-GAAP basis widening from the past quarter to nearly 73%. It may be a smaller world for Nvidia without China, but perhaps a no less lucrative one.

Beginning in medieval times, foreign traders nicknamed India “The Golden Sparrow” because it exported spices, perfumes, high-end textiles and other luxury goods while asking only for gold in return. That sobriquet, Sone ki Chidiya in Hindi, became embraced at home as a symbol of economic pride.

On Wednesday, US President Donald Trump introduced a sparrow tax: He made good on a promise to slap onerous 50% tariffs on India, part of an effort to pressure Prime Minister Narendra Modi’s government to dial back its trading relationship with Russia.

A Trade Conundrum

Trump has said that the 50% tariff rate — 16% more than what China is facing and applied after an initial 25% rate — is a penalty for New Delhi’s purchases of Russian arms and oil, which the US, fellow G7 countries and other allies have sanctioned over Moscow’s invasion of Ukraine. The sanctions on Russian oil have made it cheaper in recent years, and India now sources 39% of its crude there compared with 1% before the war. Modi’s government has remained defiant, stating that it will purchase energy wherever it secures the “best deal” and take “all actions necessary to protect its national interests.” But the calculus is not so simple.

That’s because one thing in the national interest is having a good relationship with your largest trading partner. For India, that happens to be the US: The two exchanged $131.8 billion in bilateral trade in the 2025 fiscal year, its $127.7 billion relationship with China coming in second. Meanwhile, Trump’s 50% tariff is so high that Japanese brokerage Nomura said it effectively amounts to “a trade embargo.” About two-thirds of India’s $86.5 billion in annual exports are covered by Trump’s new tariffs, enough to devastate some sectors and erase up to a percentage point of GDP growth, according to economists:

• India’s generic pharmaceuticals, electronics, and petroleum products industries are exempt from the tariffs, while aluminum, steel and copper will remain subject to a lower 25% levy. The 50% tariff will target industries such as textiles, jewelry, leather and aquaculture that support massive levels of employment.
• The country’s $179 billion textiles industry shipped out $37.7 billion in exports in the 2025 fiscal year, and the US bought $10.3 billion of those. The New Delhi-based Global Trade Research Initiative (GTRI) estimates US exports in the sectors hit by the tariffs could fall from $60.2 billion to $18.6 billion, a 70% nosedive, while overall exports to America could drop over 40%. That would jeopardize untold numbers of jobs, especially in cities where the 7.1% unemployment rate in June was well above the 5.6% national average.

What Will It Take? The Indian government downplayed the impact of tariffs on local media, citing the country’s increasingly diversified export economy, which includes a growing presence in Asia, Africa and Latin America. The GTRI estimates Indian exports, excluding the US, will rise 5% in the current fiscal year to $368.5 billion. But a simple cost-benefit analysis may bring Modi’s government to the bargaining table. While Indian firms have saved an estimated $17 billion buying cheap Russian oil since 2022, the tariffs could wipe out $37 billion in just the current fiscal year, which ends in March 2026.

Not all parents think the iPad kids are all right, and it’s showing in sales of less-connected toys like Yoto’s screenless speaker. Yoto said sales of its speakers boomed 86% last year and 84% the year before that. The UK startup, which counts Meta CEO Mark Zuckerberg and Sir Paul McCartney among its investors, expects to turn its first profit this year.

Over 3 million people play music and stories on Yoto’s $70 to $100 speakers (mini or full-size) by popping physical cards into a slot at the top. The design is intentionally old school, so that kids don’t need to interact with a phone or other device to jam out to “Do You Want to Build a Snowman?” 6,000 times in a row. Parents are willing to pay $15 per card to avoid having their Spotify Wrapped dominated by the “Frozen” soundtrack.

Dumb Tech in Demand

Yoto’s not the only kids’ speaker on the block. Rival startup Tonies, which sells speakers that play music via magnetic figurines (like Ms. Rachel and Peppa Pig), has sold 9.5 million Tonieboxes and 125 million figurines.

Both speakers wrap into the larger trend of kids, and grownups, opting for more analog tech:

• In a sign it’s not just kids opting for physical audio options, vinyl record revenue hit its highest level since 1984 last year — CD sales also saw an uptick.
• Beyond audio, startups are seeing success selling minimalist “dumb phones” that have pared-down functionality compared with smartphones. For kids, phones with extra parental controls, like the Bark Phone, are gaining traction. Even landlines are having a moment with the return of retro corded home phones.

Still Scrolling: Zuckerberg’s investment in Yoto comes after years of lawsuits claiming Meta addicted children to social media and failed to protect them online. Despite these concerns and the rollout of tools meant to help limit screen time, CommonSense Media found that US kids’ screen time has remained about the same for the past five years. Two-year-olds spend about 2.5 hours a day on screens, while four in ten kids have their own tablet by their second birthday. One place kids’ screen time is growing: short-form videos like TikToks and Instagram Reels.