In a bid to compete with Chinese tech giant Huawei, NVIDIA Corp NVDA has reportedly slashed the prices of its most advanced AI chips in China.
What Happened: The price of Nvidia’s H20 chip, designed specifically for the Chinese market, has been reduced due to an oversupply, Reuters reported on Friday, citing sources familiar with the matter.
The H20 chip is now being sold at a discount of over 10% compared to Huawei’s Ascend 910B, the most powerful AI chip from a Chinese company.
The price cut highlights the challenges faced by Nvidia’s China business, including U.S. sanctions on AI chip exports and increased competition. These factors have cast a shadow over the company’s future in a market that contributed 17% of its revenue for fiscal 2024.
Despite the challenges, Nvidia introduced three chips tailored for the Chinese market late last year, after U.S. sanctions prevented it from exporting its most advanced semiconductors.
“Nvidia is walking a fine line and working on a balancing act between maintaining the Chinese market and navigating U.S. tensions,” said Hebe Chen, a market analyst at IG. “Nvidia is definitely preparing for the worst in the long term.”
“Our data centre revenue in China is down significantly from the level prior to the imposition of the new export control restrictions in October,” said CFO Colette Kress during Nvidia’s first quarter earnings on Wednesday. “We expect the market in China to remain very competitive going forward.”
Nvidia did not immediately respond to Benzinga's request for comment.
Why It Matters: The price cut by Nvidia comes at a time when China is urging tech giants to shift away from foreign chip makers and boost domestic AI chip purchases. This move is part of China’s efforts to reduce its reliance on foreign technology.
Earlier in April, both Intel and Nvidia revealed new products for China and adapted their AI chip strategies in response to U.S. sanctions. China had criticized the U.S. chip export rules, which were impacting companies like Nvidia and AMD.
Despite the U.S. imposing a ban on such technology, Chinese entities reportedly acquired high-end Nvidia chips. The chips were obtained through third-party vendors and were embedded in servers made by Super Micro Computer Inc, Dell Technologies Inc, and Gigabyte Technology Co Ltd.
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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