NVIDIA forced to sell its GPUs in China

Due to US restrictions that hamper the performance of its GPUs, increasingly fierce competition and a directive from Beijing that requires companies in the country to buy chips designed by local companies, NVIDIA is no longer in a calm situation than before in China.

NVIDIA’s success in the field of artificial intelligence is indisputable: its GPUs such as the H100, accelerators intended for data centers, sell like hot cakes (according to TechPowerUp, last year NVIDIA dominated the market of GPUs for AI up to 90%). Last March, the company unveiled its Blackwell GPU, which it presents as the most powerful AI chips at the momentand quickly warned about it initial supply would not satisfy demand. In addition, NVIDIA is reportedly planning a new generation of GPUs next year, Rubin. In short, at first glance everything seems to be going well.

Sanctions that put obstacles in the way of NVIDIA

Due to US sanctions, which limit sales of certain components in China based on their performance, NVIDIA’s situation in the Middle Kingdom is a bit more complicated. So far, however, the company led by Jensen Huang has done quite well: taking advantage of the delay from its local competitors, it is marketing shortened versions of its GPUs. These products include the H20, derived from the H800, for data centers – a solution that was finally launched in the country at the beginning of the year – or even GeForce RTX 4090D, to take the example of a consumer product.

H20 Specifications © NVIDIA

According to a report from Reuters, however, the horizon is darkening in China for NVIDIA. The newspaper reports that the start of H20 is less good than expected: there is an oversupply (hence the demand is lower than expected). As a result, the company was forced to lower its pricing by around 10%.

In addition, NVIDIA would now face stiff competition from Huawei. The Chinese brand, which has struggled to get rid of US sanctions, which have particularly hampered its production capacity, has had its head above water for several months. In particular, it markets Ascend 910B GPUs that deliver computing power equivalent to the A100 GPU, according to a report from Semianalysis.

Specifically, according to Reuters, NVIDIA would sell its H20s for 100,000 yuan per unit, while Huawei sells its 910B for more than 120,000 yuan per unit. NVIDIA’s eight-card server is reportedly priced at around 1.1 million to 1.3 million yuan per server, while Huawei’s is said to sell for around 1.3-1.5 million yuan per server. And despite this price difference, Chinese customers, for whom economic patriotism is not a simple display but a dogma, would favor Huawei’s chip.

Harmful policy decisions for NVIDIA

Actually a previous report of The information claims that companies such as Alibaba, Baidu, ByteDance and Tencent have been ordered by Beijing to divest themselves of foreign-made chips such as those from NVIDIA. A reasonable return to American politics, we are tempted to think.

this creature Reuters highlights that the Chinese market contributed 17% to NVIDIA’s revenue for fiscal year 2024. But last Wednesday, when the company’s financial results were presented, the keywords were caution and uncertainty.

While China’s global share of the AI ​​industry is expected to exceed 30% by 2035, Hebe Chen, market analyst at IG, according to a report by Chinese market research firm CCID Consulting, believes that “NVIDIA is on a tight leash trying to find a balance between maintaining the Chinese market and tensions with the US”.

On NVIDIA’s side, Colette Kress, its chief financial officer, declared on Wednesday “Data center revenue in China has fallen significantly from levels before the introduction of new export control restrictions in October”. She added: “We expect the Chinese market to remain very competitive in the future” ; to put it another way, NVIDIA is getting more and more challenged there.

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