PESTEL is a strategic analytical tool and the acronym stands for political, economic, social, technological, environmental and legal factors. Nvidia PESTEL analysis involves the analysis of potential impact of these external factors on the bottom line and long-term growth prospects of the multinational technology company.
There is a host of political factors that can affect Nvidia. These include geopolitical tensions, government incentives and regulations, corruption, freedom of press, trade union activities and others. Moreover, the extent of bureaucracy, government tariffs and trade controls, as well as, tax policies can also have implications on the performance of the multinational technology company.
Nvidia had to experience the effect of an external political factor of government intervention into its growth plan. The company had to abandon the acquisition plan of chip technology company ARM for USD 40 billion from Soft Bank after an investigation from UK’s Competition & Markets Authority and the US Federal Trade Commission sued to block the proposed merger due to the concerns that combined firm to stifle competing next-generation technologies.. The multinational technology company is not immune from such interferences in the future as well.
US-China Tech War
Nvidia had to bear the collateral damage due to US-China tech war during the past few years. The world’s most valuable semiconductor company has been blocked from selling its most advanced chips — the H100 and A100 series — to Chinese customers since August when the US imposed export controls on technology used for AI. Nvidia has been forced to reconfigure some of its chips to comply with US rules limiting the performance of products sold in China. It is not the first instance where Nvidia and other major technology companies have been affected by so called tech war between the US and China, but it is not the last one as well.
A range of external economic factors also affect Nvidia operations and the bottom line. The long list of external economic factors include the overall macroeconomic climate, inflation rate, interest rate, rate of unemployment, currency exchange rate and others.
Changes in currency exchange rates
Nvidia semiconductor wafers are manufactured, assembled, tested and packaged by third parties located outside of the United States and the company generated 84% of revenue for fiscal year 2022 from sales outside of the United States. Accordingly, the amount of company’s profits are subject to the changes in currency exchange rates.
Specifically, If the U.S. dollar strengthened by 10% as of January 30, 2022 and January 31, 2021, the amount recorded in accumulated other comprehensive income (loss) related to Nvidia foreign exchange contracts before tax effect would have been approximately USD103 million and USD84 million lower as of January 30, 2022 and January 31, 2021, respectively.
Nvidia Corporation Report contains a full version of Nvidia PESTEL analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Nvidia. Moreover, the report contains analyses of Nvidia business strategy, leadership, organizational structure and organizational culture. The report also comprises discussions of Nvidia marketing strategy, ecosystem and addresses issues of corporate social responsibility.
 Federal Trade Commission (2021) Available at: https://www.ftc.gov/news-events/news/press-releases/2021/12/ftc-sues-block-40-billion-semiconductor-chip-merger