Nvidia selling processors at low price in China amid chip war with Huawei: Report

Huawei–Nvidia chip war in China is now taking a new turn as the latter has reportedly dropped the price of its most advanced AI processors. The American chip maker is trying to compete with its rival amid the tough US export trade regulations.

The story began when the U.S. not only imposed a ban on Chinese firms but also restricted foreign companies from exporting high-quality chips to China. As a result, Nvidia’s semiconductor business got into trouble, especially for China market.

Even though the US chip maker is trying hard to save its processor business in the Chinese ground, competitors like Huawei seem to become stronger day by day.

A recent report showed that Huawei HiSilicon shipped 8 million Kirin SoCs globally in the first quarter of this year, moving gradually towards new success.

Inputs also reveal that the Chinese government is fully supporting tech giants like Huawei and instructing other native firms to buy China-made chipsets rather than becoming prey to foreign industries. This ultimately raises problems for Nvidia.

Nvidia’s Business in China

The American chip producer launched three AI chips in China last year, complying with the U.S. trade export rules. It simply means that though these processors are good enough, they lack advancement as well as efficiency at some points.

One of the three processors is H20 which is said to be the most high-end product of Nvidia in the China market. Although supply chain sources say that these chipsets are present in a huge volume, showing a sign of weak demand in the consumer market.

While a few months ago, Nvidia AI chips used to cost similar to Huawei’s Ascend 910B processor, the company has now dropped its price by 10%. The chip producer is making every effort to stay in the Chinese market, but things don’t seem to be in their hands anymore.

China Market & Nvidia’s Earning

Reports further mention that China’s global share in the AI industry could boost to 30% by 2035. With such increment, Hebe Chen – a market analyst at IG said:

“Nvidia is walking a fine line and working on a balancing act between maintaining the Chinese market and navigating U.S. tensions. Nvidia is definitely preparing for the worst in the long term.” 

Although the earnings of Nvidia made in the first quarter of this year hints that the company has declined significantly from its past performance due to U.S. sanctions.

One of the senior executives at the respective semiconductor firm expects to see the China market be more competitive in the time ahead with heavy rivalry from Huawei.

Nvidia’s Chip Prices:

The information says that the H20 chips in China have a price tag of 100000 yuan per card and the eight-card server bears a cost of 1.1 to 1.3 million yuan.

Analysts says, things will fall in favor of Nvidia based on the performance and selling of H20 chips in the Chinese market. It would be worth seeing how the price drop will help Nvidia to fight with Huawei in this chip battle.

[Source – Reuters]