Nvidia's newest AI chip for the Chinese market is off to a slow start, with an oversupply pushing its price below that of Huawei's rival chip, sources reveal to Yahoo Finance.
The price reduction is only one of many challenges companies like Nvidia face in China due to US sanctions and increasing local competition, which impacted a market that accounted for 17% of its 2024 fiscal revenue.
Despite a recent surge in Nvidia's share prices following a strong revenue forecast, as reported by VCPost on Thursday, May 23, the intense competition in China raises concerns for investors.
Nvidia Chips in China
Last year, Nvidia launched three AI chips specifically for China after US sanctions barred it from exporting its most advanced chips. The H20, Nvidia's most powerful chip available in China, has seen weak demand, resulting in prices dropping over 10% below Huawei's Ascend 910B, sources said.
In fact, over the past six months, Huawei's 910B has seen more interest from state buyers than Nvidia's H20, according to government procurement data.
Analysts note Nvidia is striving to maintain its market share in China, but its prospects remain uncertain. China's share of the global AI market is expected to exceed 30% by 2035, according to CCID Consulting.
Nvidia's H800 and A800 chips, along with other advanced lines, are banned in China, further complicating its position. Beijing's directive for companies to buy Chinese chips has also hampered Nvidia, although this order has lessened recently.
Sources noted that the H20 became widely available in China last month, with major tech firms like Alibaba placing orders for over 30,000 units. The H20 costs around 100,000 yuan per card, while Huawei's 910B sells for over 120,000 yuan per card.
For now and in the unforeseen future, intense pricing competition with Huawei will be crucial for Nvidia's position in China.
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