Source: Zhitong Finance
According to Reuters, citing people familiar with the matter,$NVIDIA (NVDA.US)$The most advanced artificial intelligence chips developed for the Chinese market had a poor start, and sufficient supply forced them to be priced lower than rival chips from Chinese tech giant Huawei.
In the context of increased competition, the flattening price highlights the challenges facing Nvidia's business in China and casts a shadow over the company's future in the Chinese market. This market contributed 17% to Nvidia's 2024 revenue.
The growing competitive pressure in China also sounded a wake-up call for investors in this American semiconductor design company. The company's stock price continued its astonishing rise after announcing strong earnings expectations on Wednesday.
Nvidia, which dominates the artificial intelligence (AI) chip market, launched three chips tailored for China at the end of last year after US sanctions prevented it from exporting its most advanced semiconductors.
Among these chips, the H20 received the most attention because it is the most powerful Nvidia product sold in China, but three supply chain sources said there is sufficient chip supply in the market, which indicates weak demand.
Two of the three sources told the media that in some cases, the H20 chip sells for more than 10% less than Huawei's Ascend 910B (the Chinese company's most powerful artificial intelligence chip).
Analysts said that although Nvidia is trying to gain a share in a market where it cannot afford to lose, the outlook is increasingly uncertain.
According to a report by Chinese market research firm CCID Consulting, China's share of the global artificial intelligence industry is expected to exceed 30% by 2035.
IG's market analyst ?$#@$ Chen said, “Nvidia is carefully balancing maintaining the Chinese market with dealing with the tension in the US.” “Nvidia is definitely preparing for the worst in the long run.”
When announcing first-quarter results on Wednesday, Nvidia executives warned that the company's business in China was “significantly” lower than in the past.
“Our data center revenue in China has dropped significantly compared to the level before new export control restrictions were implemented in October,” said Chief Financial Officer Colette Kress. “We anticipate that competition in the Chinese market will continue to be very intense in the future.”
Analysts said H20's performance will be a major factor in its business in China, and the long-term outlook will depend on how it competes with local tech giant Huawei.
Huawei only began challenging Nvidia last year. Sources say the Guangdong-based company will significantly increase shipments of its Ascend 910B chip this year. Sources say the chip is superior to the H20 in some key metrics.
editor/tolk