Competition intensifies, Nvidia is rumored to cut prices for AI chips in China

Nvidia Corp\’s (NVDA.US) state-of-the-art artificial intelligence chips for the Chinese market are off to a rocky start, with ample supply forcing them to price lower than rival chips from Chinese tech giant Huawei, according to people familiar with the matter.

Nvidia Corp\’s (NVDA.US) state-of-the-art artificial intelligence chips for the Chinese market are off to a slow start, according to people familiar with the matter. Sufficient supply has forced it to be priced lower than rival chips from Chinese tech giant Huawei.
Against the background of intensifying competition, the flattening of prices highlights the challenges facing Nvidia\’s Chinese business, casting a shadow over the company\’s future in the Chinese market.
This market contributed 17% to Nvidia\’s fiscal 2024 revenue.
Growing competitive pressure in China has also sounded alarm bells for investors in the U.S. semiconductor design company.
The company\’s stock extended its stunning gains Wednesday after reporting a bumper revenue forecast.
Nvidia, which dominates the artificial intelligence (AI) chip market, launched three chips tailored for China late last year after U.S. sanctions prevented the export of its most advanced semiconductors.
Of these chips, the H20 is getting the most attention because it is the most powerful Nvidia product sold in China, but three supply chain sources said there is sufficient supply of chips on the market, indicating weak demand.
Two of the three sources told the outlet that in some cases the H20 chips are priced more than 10% less than Huawei\’s Ascend 910B, the Chinese company\’s most powerful artificial intelligence chip.
Analysts say that while Nvidia is trying to gain share in a market it cannot afford to lose, the outlook is increasingly uncertain.
According to a report by Chinese market research company CCID Consulting, China\’s share of the global artificial intelligence industry is expected to exceed 30% by 2035.
Hebe Chen, a market analyst at IG, said that Nvidia is carefully striking a balance between safeguarding the Chinese market and dealing with tense relations with the United States.
Long term. Nvidia is definitely preparing for the worst-case scenario.
Nvidia executives warned when releasing first-quarter results on Wednesday that the company\’s business in China was significantly lower than it had been in the past.
Our data center revenue in China is down significantly from levels before new export control restrictions were imposed in October, said Chief Financial Officer Colette Kress.
We predict that competition in the Chinese market will remain very fierce in the future.
Analysts say the H20\’s performance will be a major factor in its business in China, while the long-term outlook will depend on how it competes with local tech giant Huawei.
Huawei only began to challenge Nvidia last year. Sources said the Guangdong-based company will significantly increase shipments of its Ascend 910B chip this year. Sources said the chip is better than the H20 in some key indicators.

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