Nvidia has reduced the prices of its H20 chip in China. Reuters reports that his move comes as the company grapples with an oversupply and stiff competition from Chinese tech giant Huawei, according to sources familiar with the matter.
Impact of U.S. Sanctions and Market Dynamics
The price reduction highlights the challenges Nvidia faces in China, a market that contributed 17% to its revenue for fiscal 2024. U.S. sanctions on AI chip exports have impacted Nvidia’s ability to sell its most advanced semiconductors in the region. As a result, Nvidia introduced three new chips tailored for the Chinese market late last year, including the H20 chip.
Huawei’s Competitive Edge
Huawei’s Ascend 910B AI chip, a direct competitor to Nvidia’s H20, has reportedly outperformed Nvidia’s offering in certain metrics. Sources indicate that Nvidia’s H20 chip is being sold at a more than 10% discount compared to Huawei’s Ascend 910B. This pricing strategy underscores the intense competition Nvidia faces as it attempts to maintain its foothold in the Chinese market.
Nvidia’s data center revenue in China has seen a decline since the imposition of new export control restrictions in October. During the company’s first-quarter earnings call, CEO Jensen Huang acknowledged the competitive pressures and attributed them to the limitations on the company’s technology due to U.S. sanctions. This situation has added a note of caution for investors, even as Nvidia’s shares have rallied following a strong revenue forecast.
Huawei’s Strategic Moves
Huawei is not standing still. The company plans to increase shipments of its Ascend 910B chips this year, further challenging Nvidia’s position in the market. This strategic move by Huawei could exacerbate Nvidia’s difficulties in maintaining its market share in China.
The competitive landscape is further complicated by broader geopolitical tensions. Last month, U.S. Secretary of Commerce Gina Raimondo commented on the Kirin 9000s chip used in Huawei’s Mate 60 Pro smartphone, noting that it is not as advanced as U.S. semiconductors. The Kirin 9000s chip was developed by Semiconductor Manufacturing International Corp. (SMIC) using technology from U.S.-based companies Applied Materials Inc. and Lam Research Corp.
Last Updated on November 7, 2024 8:09 pm CET
