June 16, 2024

Jensen Huang grimacing

Nvidia CEO Jensen Huang at a media roundtable meeting in Singapore on December 6, 2023.
Photo: Edgar Su (Reuters)

The advanced chips Nvidia developed for its market in China are reportedly not selling well, and it’s forcing the world’s most valuable chip company to cut prices to compete with homegrown competitors.

The H20, the most advanced chip designed to not require an export control license, has weak sales in China, causing Nvidia to price it below a rival chip from Huawei, Reuters reported, citing unnamed sources familiar with the matter.

Nvidia released three artificial intelligence chips, including the H20, in the Chinese market late last year after the U.S. tightened controls on selling advanced chips to the country. With an abundant supply of H20 chips, Nvidia has sold some of the chips at a more than 10% discount compared to the Ascend 910B AI chips from Huawei, sources told Reuters.

During Nvidia’s first-quarter earnings call Wednesday, the company said it expects the Chinese market “to remain very competitive going forward.” Nvidia’s data center revenue in China “is down significantly from the level prior to the imposition of the new export control restrictions in October.” Nvidia chief executive Jensen Huang said the tight competition in China is due to limitations on the company’s technology.

Huawei is preparing to increase shipments of Ascend 910B chips this year, which could pose a threat to Nvidia’s business in China, especially since Huawei’s chip outperforms the H20 in some metrics, sources told Reuters.

However, last month, U.S. Secretary of Commerce Gina Raimondo said a different advanced chip used in Huawei’s Mate 60 Pro smartphone shows U.S. efforts to curb advanced chipmaking in China are working.

The Kirin 9000s chip developed by China’s top chipmaker Semiconductor Manufacturing International Corp. (SMIC) “is not nearly as good, … it’s years behind what we have in the United States,” Raimondo said. “We have the most sophisticated semiconductors in the world. China doesn’t.” Huawei and SMIC reportedly used technology from U.S.-based companies Applied Materials Inc. and Lam Research Corp. to develop the chips.

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