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Nvidia's H20 AI chip faces price cuts below Huawei's Ascend 910B as U.S. sanctions and rivalry with Huawei intensify.
Nvidia's H20 Chip Faces Price Cuts Due to Oversupply
The most advanced AI processor developed by Nvidia for the Chinese market has gotten off to a sluggish start. Due to abundant supply, its price has been forced below that of a competitor chip from Chinese tech giant Huawei.
The flattening prices highlight the challenges Nvidia's China business encounters in the wake of U.S. sanctions on AI chip exports and increased competition.
In response to the U.S. sanctions that have hindered the export of its most advanced semiconductors, Nvidia, a leading player in AI processors, strategically introduced three chips tailored for the Chinese market late last year.
Three people in the supply chain told Reuters that there is a lot of the H20 chip on the market, which means there is little demand for it.
Huawei Chip Outsells Nvidia Amidst US Sanctions
There have been reports of the H20 processors being offered at a discount of more than 10% compared to Huawei's Ascend 910B, the most powerful artificial intelligence chip produced by a Chinese company. In some key metrics, the Ascend 910B chip outperforms the H20, according to the sources.
"Nvidia is walking a fine line and working on a balancing act between maintaining the Chinese market and navigating U.S. tensions," Hebe Chen, a market analyst at IG, remarked. "Nvidia is definitely preparing for the worst in the long term."
During Nvidia's first-quarter earnings report on Wednesday, senior executives cautioned that the sanctions have "significantly" reduced the company's business in China compared to previous periods.
Analysts Predict Tough Road Ahead for Nvidia in China
According to analysts, H20's performance in China will be crucial to its business, and its long-term prospects will be determined by how it performs compared to Huawei, the country's leading tech company.
Huawei began challenging Nvidia only a year ago, and according to sources, the Guangdong-based company will significantly increase shipments of its Ascend 910B chip this year.
Yahoo Finance reports that only five state or state-affiliated purchasers have expressed interest in purchasing H20 chips over the past half-year, compared to over a dozen for Huawei's 910B during the same period.
Photo: Microsoft Bing
