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Nvidia Slashes Prices on H20 AI Chips in China Amid Fierce Competition from Huawei and U.S. Sanctions

Nvidia has recently implemented price reductions for its H20 AI chips in China due to fierce competition from Huawei and the repercussions of U.S. sanctions. Nvidia’s cutting-edge AI processor designed for the Chinese market is currently being offered at a reduced price due to an oversupply and low demand, as reported by reliable sources.

The H20 chip is now offered at a discount of more than 10% compared to Huawei’s Ascend 910B, which is the top AI processor produced by the Chinese technology company.

The decrease in price emphasizes the difficulties that Nvidia’s business encounters in China, a region that accounted for 17% of its revenue in fiscal year 2024.

Nvidia is facing growing difficulties in the competitive market of China, particularly due to the imposition of U.S. sanctions that restrict the company from exporting its cutting-edge semiconductors.

The H20, one of the three chips launched specifically for the Chinese market, is now facing difficulties in gaining popularity.

According to market analyst Hebe Chen from IG, Nvidia is facing a delicate situation as it tries to both retain its presence in the Chinese market and navigate the tensions between the United States and China.

Nvidia is actively planning for any adverse circumstances in the long run. Nvidia’s senior executives have cautioned that their operations in China have been substantially impacted by these penalties.

China is projected to have a share of over 30% in the global AI industry by 2035, which highlights its significance as a crucial market for AI chip producers.

Nevertheless, Nvidia’s H20 is encountering formidable competition from Huawei’s Ascend 910B, which is purportedly surpassing the H20 in some crucial benchmarks.

According to sources, Huawei intends to augment the number of shipments for the 910B chip in the current year, thereby heightening the level of competitiveness.

 

The market dynamics are additionally impacted by a regulation from Beijing that urges corporations to procure chips manufactured in China, although this directive has lately been relaxed.

Notwithstanding the difficulties, certain prominent Chinese technology companies, such as Alibaba, have made substantial purchases of Nvidia’s H20 chips.

The cost of Nvidia’s H20 processors is approximately 100,000 yuan each card, while the price range for eight-card servers is between 1.1 million and 1.3 million yuan per server.

By comparison, Huawei’s 910B chips are available for purchase at a price exceeding 120,000 yuan per card, while server equivalents are priced between 1.3 million and 1.5 million yuan.

Nvidia must employ a competitive pricing approach in order to sustain its position in the Chinese market. Dylan Patel, the creator of SemiAnalysis, stated that approximately one million H20 chips will be exported to China during the latter half of 2024.

Patel emphasized that the H20 has a greater manufacturing cost because to its larger memory capacity, however it is being marketed at a price that is half that the H100, Nvidia’s high-performance processor that is prohibited from being exported to China.

In order to succeed in China, Nvidia’s ability to effectively compete with Huawei in terms of pricing and performance will be of utmost importance as it navigates through this intricate market.

The current price competitiveness and market rivalry highlight the wider difficulties and strategic actions in the AI chip sector in the context of geopolitical tensions.

Source : https://www.reuters.com/technology/nvidia-cuts-china-prices-huawei-chip-fight-sources-say-2024-05-24/

(The story is published based on the data from a syndicated feed. However there can be minor changes from the original source article.)

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