Can the cheap China AI processor from Nvidia survive given Huawei’s explosive growth?
Can the cheap China AI processor from Nvidia survive given Huawei’s explosive growth?
Nvidia is preparing to challenge Huawei if it wants to remain relevant in the fast growing artificial intelligence chip sector in China.
Third attempts at regulatory compliance by Nvidia might be effective in preserving its position in face of growing local competition. For the company, the next artificial intelligence chip designed for China represents some strategic risk.
Despite growing geopolitical pressure from next administrations in the United States, Nvidia is adamant in its rejection to totally leave the Chinese market. The company is planning to release a stripped-down Blackwell-based processor. This processor will be developed primarily to overcome export restrictions and challenge advanced domestic alternatives, mostly those presented by the large Huawei system.
Based on sources referenced by Reuters, a strategy born out of necessity for Nvidia’s most recent offering will feature a price tag between $6,500 and $8,000. From the price range of $10,000 to $12,000 the H20 model, which has since been outlawed, sought, this marks a notable decline. The expectation of manufacturing in June emphasizes the urgency Nvidia has under its artificial intelligence chip project for China.
Achieving the cost cut calls for major concessions. The new CPU will employ Nvidia’s RTX Pro 6000D base in combination with standard GDDR7 memory alone, not the high-bandwidth memory that is usually seen in premium versions.Of much more importance is the fact the chip does not have Taiwan Semiconductor’s innovative CoWoS packing technique. This decision restricts the complexity of the manufacturing process as well as the capacities.
Effective limitation of H20 sales in April resulted in a $5.5 billion writedown on Chinese inventories and liabilities incurred by Nvidia. The initial intention of the company to change the H20 in order to preserve sales in China eventually proved to be impractical, according to the current export rules in the United States.
Rising degrees of domestic rivalry
The artificial intelligence chip landscape of China has been drastically changed with Huawei’s rise as a real competitor. Among the leading domestic technological businesses using the Ascend 910C and 910B CPUs are Tencent, Baidu, and ByteDance. These CPUs show competitive performance and have been especially employed in inference applications, in which case they are relevant.
The scale of the competitive pressure includes whole infrastructure solutions, which beyond individual chips. It is very evident that Huawei intends to compete in the full artificial intelligence hardware stack as their CloudMatrix 384 rack system directly rivals Nvidia’s Blackwell GB200 NVL72 setup.
The dynamics of the market have mirror images of imbalance. Reports claim that H20 chips have been offered at discounts greater than 10% when compared to Ascend 910B. This underlines how challenging it is for Nvidia to maintain its price advantages over local rivals.
Jensen Huang, the Chief Executive Officer, admitted the drop and said that new export restrictions had over half of Nvidia’s market share in China dropped.
Stated are billions of dollars.
The financial consequences are really noteworthy. While Nvidia stated sales in China of over $17 billion in 2024, Huang estimates the future market for artificial intelligence chips in China to be about $50 billion. The figures help to explain why the company is still striving for Nvidia China AI chip development in face of governmental obstacles.
Nvidia seems to be not focusing all of its eggs in one certain product basket. Said to be producing a second Blackwell model for the Chinese market, the company plans to start manufacture in September. The multi-pronged approach shows how committed Nvidia is to keeping its presence in the Chinese market by means of a range of product offers geared to different customer groups and regulatory demands.
