Nvidia AI Chips in China
Nvidia’s AI chips in China are on track to make $12 billion this year. This is despite strict US export controls. The company’s H20 chips are designed to work around these restrictions. Analysts expect Nvidia’s AI chips to far surpass Huawei’s Ascend 910B in sales. Estimates suggest Huawei will sell about half as many units.
US export controls aim to limit advanced AI chip sales to China. Officials worry that these chips might boost China’s AI for military uses. This restriction has caused a shortage of AI chips. Chinese tech giants like ByteDance, Tencent, and Alibaba are struggling. They are falling behind US companies like OpenAI, Microsoft, Meta, and Google.
Each H20 chip costs between $12,000 and $13,000. Nvidia could make over $12 billion from these sales. This is more than the $10.3 billion Nvidia earned from all its China business in the fiscal year ending January 2024. Nvidia has not commented on these projections, and Huawei has not responded to requests for comment.
Since 2022, Nvidia has faced challenges in China due to US export controls. Local companies, especially Huawei, have gained ground. Chinese cloud providers and AI startups are turning to domestic options. Jensen Huang, Nvidia’s CEO, has noted a drop in business and increased competition. Colette Kress, Nvidia’s finance chief, reported a significant decline in revenue from China’s data center segment recently.
The H20 chip had a slow start but is now gaining popularity in China. Analysts from Morgan Stanley and SemiAnalysis report positive feedback on the H20 chip. Despite being less advanced than Nvidia’s US chips, it still performs well. Dylan Patel of SemiAnalysis says the H20 is better than Huawei’s 910B in practical use.
Huawei plans to sell around 550,000 Ascend 910B chips. However, it faces production challenges. Many Chinese AI companies use Nvidia’s ecosystem. Switching to Huawei’s technology would be costly and time-consuming.
Nvidia has introduced the H20 chip to meet US restrictions. Revenue from China has decreased, but overall revenue, including from Hong Kong, increased by over 50% year-on-year. In the latest quarter ending in April, total revenue from China rose to $2.5 billion.
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