The American chipmaker Nvidia has had to reduce the price of its H20 chip, specifically designed for the Chinese market, due to oversupply, according to a report by Reuters. The H20 chip is now being sold at a 10% discount compared to the Ascend 910B chip from Huawei, a major Chinese chipmaker. Nvidia introduced the H20 chip earlier this year in response to restrictions imposed by the US government, which prevented the company from selling its most powerful chips in China.
The H20 chip is one of three AI chips created by Nvidia for the Chinese market. Its computing power has been scaled back to comply with US regulations governing the export of advanced semiconductors to China, as reported by the SemiAnálisis semiconductor blog. This has put Nvidia at a competitive disadvantage in China, where demand for the H20 chip has been limited due to its lower cost-performance ratio and the availability of Chinese alternatives. Additionally, Chinese authorities have encouraged technology companies to switch from using Nvidia chips to domestic ones, although the extent to which this directive has been implemented is uncertain.
E-commerce giants like Alibaba have shown little interest in purchasing H20 chips, with only five state or state-affiliated buyers expressing interest in the past six months. In contrast, Huawei’s 910B chip has garnered interest from over a dozen buyers. While the H20 chip is intended to bolster Nvidia’s presence in the Chinese market, it remains unclear if there is sufficient demand for it. Analysts suggest that the performance of the H20 chip will play a crucial role in its success in China.
Hebe Chen, a market analyst at IG, noted that Nvidia is treading carefully to maintain its position in the Chinese market while navigating tensions with the United States. She emphasized that Nvidia is taking precautions for potential long-term challenges.
In conclusion, Nvidia has had to lower the price of its H20 chip in response to oversupply and stiff competition from Chinese alternatives. The company faces hurdles in the Chinese market due to regulatory constraints, limited demand, and pressure to use domestic chips. The performance of the H20 chip will be critical to Nvidia’s success in China as it navigates geopolitical challenges and strives to maintain its foothold in a key market.
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https://www.businessinsider.com/nvidia-china-competition-chip-makers-ai-huawei-2024-5