- U.S. government restrictions have made it difficult for Nvidia to expand in China.
- Nvidia has cut prices of its H20 chips in China amid competition from domestic chipmakers.
- Some say demand for Nvidia’s H20 is low due to its cost-to-performance ratio and local alternatives.
Nvidia faces stiff competition from Chinese chipmakers.
U.S. semiconductor manufacturers Reuters reported that the company’s latest chip, the H20, designed for the Chinese market, is on sale in plentiful supply.
In some cases, the H20 chips are being sold at a 10% discount compared to rival Chinese chipmaker Huawei’s Ascend 910B, the most powerful chip made by a Chinese company.
Nvidia began selling the H20 earlier this year after the U.S. government introduced restrictions that banned the sale of the company’s most powerful chips in China.
The H20 chip is one of three AI chips that Nvidia has designed for the Chinese market, and its computing power is reduced compared to Nvidia’s other models to comply with U.S. restrictions on exporting advanced semiconductors to China, according to semiconductor blog SemiAnalysis.
This has made it more difficult for Nvidia to compete in China.
A Beijing dealer told tech industry intelligence outlet Trendforce that demand for H20 chips is not that strong due to their relatively poor cost-performance and the availability of Chinese-made alternatives. China has also urged tech giants to use domestically-made AI chips instead of Nvidia chips, but it is unclear how strictly the directive is being enforced.
Along with e-commerce giants like Alibaba, just five state-owned or state-linked companies have expressed interest in buying H20 chips in the past six months, according to Reuters, while more than 10 companies have expressed interest in Huawei’s 910B.
Another distributor based in the southeastern city of Shenzhen told Trendforce that its goal for H20 is Harden Nvidia has a presence in the Chinese market but may not have the demand, and analysts told Reuters the performance of the H20 will be a big driver for the company’s China business.
“Nvidia is trying to walk a delicate balance between maintaining its presence in the Chinese market and navigating tensions with the U.S.,” Hebe Chen, a market analyst at IG, told Reuters. “Nvidia is definitely preparing for the worst in the long term.”
