Sources indicate that Nvidia is planning to release its new AI chip, the H20, in China during the second quarter of this year. This chip is part of a trio created to comply with export restrictions from the US. However, recent reports suggest that Chinese cloud companies, including Tencent and Alibaba, have expressed disinterest in purchasing the slower AI chip from Nvidia. They have reportedly expressed a preference for homegrown chips from companies such as Huawei.
The H20 chip was originally scheduled for release last November but faced a delay due to integration issues with server manufacturers. Its production volume is expected to be limited initially, with Nvidia prioritizing orders for major customers. Despite this, Chinese companies are reportedly wary of purchasing the "downgraded" H20 chip and are exploring domestic alternatives amidst concerns of potential further US restrictions.
In addition to the H20, Nvidia has also developed two other chips, the L20 and L2, to comply with the new restrictions, but the sale of any of the three chips has not been announced yet. These chips retain most of Nvidia's newest features for AI work but with reduced computing power to comply with the regulations.
Nvidia's market share in China, where it currently holds 90% of the AI chip market, is being challenged by competitors like Huawei. Chinese tech giants are reportedly considering shifting to domestic firms for advanced chip orders and increasingly exploring in-house chip development.
Huawei, in particular, has emerged as a significant competitor, securing orders from companies like Baidu following US chip curbs. The firm has made strides in developing homegrown AI chips, with some analysts and Chinese AI companies noting that Huawei's Ascend AI chips offer comparable computing power to Nvidia's A100. This has made domestically-developed chips more appealing to Chinese buyers, signaling reduced interest in Nvidia's chips among some top AI firms in China.
While Nvidia is set to release its new AI chip in China, there are indications that major Chinese cloud companies are showing reluctance to purchase it due to preferences for homegrown alternatives and concerns about potential US restrictions. The competition in the Chinese AI chip market is intensifying, with domestic firms like Huawei gaining traction against international players like Nvidia.
