Nvidia has recently lowered the prices of its specialized GPUs for the Chinese market in response to competition from Huawei. The company had introduced new products targeting the Chinese market last year due to restrictions placed by the US on exporting high-performance accelerators to China. However, Chinese customers showed more interest in locally manufactured hardware from Huawei for their AI workloads, leading Nvidia to reduce prices in order to compete.
According to Reuters, Nvidia is now selling some of its products at prices below those of Huawei’s rival hardware due to weak demand and an oversupply of Nvidia chips in the market. Nvidia’s Chinese-focused products include the H20, L20, and L2 GPUs, with the H20 being sold at a discount of more than 10% compared to Huawei’s Ascend 910B. The Ascend 910B is said to have performance comparable to Nvidia’s A100 GPU and is produced by Chinese chipmaker SMIC using a 7nm process technology.
The challenges faced by Nvidia in China have led to a decrease in revenue contribution from the country, falling from 20-25% to about 17%. Continued US restrictions preventing Nvidia from effectively competing with local manufacturers could further impact its revenue from the Chinese market. In addition, reports suggest that Samsung’s high-bandwidth memory (HBM) intended for Nvidia’s GPU products is facing issues related to power consumption and heat, potentially affecting its next-generation HBM3E products. Demand for HBM components has been increasing, and any issues with suppliers like Samsung could worsen supply shortages in the market.
Samsung has denied claims of problems with its HBM chips, stating that the memory product requires optimization based on customer needs. SK hynix, another supplier of HBM chips, has warned of limited supply due to high demand driven by the AI industry, with most of its production already sold out for this year and the next.
In conclusion, Nvidia’s price reductions in the Chinese market, along with challenges related to supply chain issues with suppliers like Samsung, highlight the competitive landscape and complexities of operating in the AI hardware market. The company will need to navigate these challenges to maintain its position in the Chinese market and address potential impact on its revenue and growth.
Article Source
https://www.theregister.com/2024/05/24/nvidia_faces_local_competition/