NVIDIA Aims to Regain China's Confidence with Sampling of New AI Chips: Report

NVIDIA is preparing to launch two distinct AI processors in China to regain market confidence, a report claimed.

NVIDIA Samples New AI Processors in China, Aiming to Sustain Market Dominance​

Reuters reports that NVIDIA provides samples of two distinct AI processors to Chinese clients to maintain the company's market dominance. Although the precise characteristics of the sampled processors remain unknown, NVIDIA's CEO Jensen Huang has provided a statement.

"We're sampling it with customers now. Both of them comply with the regulations without a license. We're looking forward to customer feedback on it. We're expecting that we're... going to go compete for business, and hopefully, we can serve the market successfully," NVIDIA's CEO Jensen Huang said.

NVIDIA's situation in the Chinese market is certainly different from what the company had hoped for, given that the company was severely impacted by the US restrictions that culminated in a comprehensive ban on AI GPU export.

Following the imposition of export bans by the US government on NVIDIA's H800 and A800 AI GPUs, the company strategically decided to reintroduce additional "cut-down variants" that adhere strictly to US export policies. This was done to sustain its presence in the Chinese markets, pivotal in NVIDIA's fiscal year 2023 financial growth.

In response, the company introduced a new line of AI GPUs, including the H20 SXM, PCIe L20, and PCIe L2. However, these GPUs failed to attract the industry's attention, and Chinese clients perceived rival offerings, such as those from Huawei, as significantly more viable.

The US embargo served as an earthquake for NVIDIA, which had established a strong presence in the Chinese market. This development came as a shock to the company. Following the visit of NVIDIA's CEO to China, Team Green appeared determined to maintain consistency in the regional markets.

Once again, the nature of the AI processors that are being sampled is unknown; however, they are probably simplified yet more optimized solutions. However, only time will tell.

Chinese Tech Giants Reject NVIDIA's 'Cut-Down' AI Chips Amid US Restrictions​

According to a source, NVIDIA encountered a fresh obstacle in pursuing artificial intelligence when Chinese customers declined to purchase the "cut-down" AI processors developed in response to more stringent US regulations.

NVIDIA has achieved substantial market penetration across various sectors in Chinese markets by leveraging its AI offerings, most notably the immensely successful Hopper H100. Even though China and its consumer base have significantly bolstered NVIDIA's data center revenue in FY23, the company's most recent product portfolio, intended to adhere to US policies, could not count better.

The Wall Street Journal reports that Chinese companies competing for dominance in generative AI, including Tencent and Alibaba, have refused to purchase any of NVIDIA's new AI GPUs, including the reduced-feature H20 and L20 developed by US policies.

Reportedly, the companies have informed NVIDIA that order volumes for this year will decrease "substantially." This is because the new offerings feature significantly diminished and degraded performance compared to the original chips. Chinese manufacturers such as Huawei are also developing AI solutions that will eventually supplant NVIDIA's market share.

Chinese tech titans allegedly view NVIDIA's H20 AI GPU, which was designed for Chinese markets, as an "impracticable" option due to its significant performance drop compared to previous offerings and the fact that Alibaba and Tencent consider Chinese alternatives to be a far superior option, at least for workloads requiring low-to-mind inference power, which Huawei AI chips can accommodate.

Huawei has reportedly received orders for as many as 5,000 Ascend 910B AI chips; although this is not a significant quantity, it is sufficient to cause concern for Team Green.

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