With the official implementation of the United States’ revamped trade policy, NVIDIA’s CEO, Jensen Huang, has expressed concerns about its potential impact on the Chinese market. The recent adjustments to U.S. export restrictions on China now encompass the embargo of various AI chips destined for China. This decision is grounded in the U.S. government’s apprehension that China’s rapid progress in artificial intelligence may grant it a military advantage, prompting restrictions on the supply of AI GPUs like NVIDIA’s H800 and A800. However, NVIDIA, a prominent GPU manufacturer, has reservations about these new policies and anticipates that they will adversely affect its market presence in mainland China.
In an interview with local media, Jensen Huang conveyed NVIDIA’s respect for the U.S. government’s decision to prioritize national interests over business concerns. He assured that NVIDIA intends to abide by the newly imposed regulations. Nonetheless, he emphasized NVIDIA’s commitment to swift global expansion while still seeking to serve its established client base in China. His remarks implied that NVIDIA will be compelled to comply with these policies, temporarily placing mainland Chinese customers on the back burner.
Furthermore, NVIDIA recognizes the growing competition posed by China’s indigenous AI products, notably from companies like Huawei. While this may seem like a conventional observation, NVIDIA should indeed be wary of Chinese firms narrowing the gap. China is making significant strides in developing in-house AI solutions, particularly in response to the AI craze within the country. The most formidable competition NVIDIA faces in this arena is from Huawei, which is purportedly producing AI chips boasting comparable raw processing power.
Chinese AI firm iFlytek has even asserted that Huawei’s Ascend AI GPUs are on par with NVIDIA’s existing AI chip lineup. With the new U.S. export restrictions, Huawei stands to capitalize on the substantial demand in the AI industry. Huawei’s consistent supply of AI GPUs, coupled with its rapid software development capabilities, could pose a substantial threat to NVIDIA’s well-established presence in the Chinese market.
The unfolding situation leaves room for speculation on how NVIDIA will adapt to the new U.S. policies. The company has set ambitious revenue targets, with the Chinese consumer base holding significant importance. NVIDIA may need to explore options such as creating “cut-down variants” or finding workarounds to navigate the evolving landscape and maintain its competitive edge in the Chinese market.