In the currently clear sky of records Nvidiathe US chip manufacturer fresh from a record first quarter (around +620% in turnover and profit) there would be a first cloud: the weak start in 2024 of Chinese market. He brings it back Reuters claiming that, thanks to the trade war between the United States and China on chips, Nvidia has decided to cut the price of its flagship product on the Chinese market, to react to the growing competition from the local manufacturer Huawei.
Beijing pushes Huawei, Nvidia lowers prices
Nvidia’s business in China has to deal with the limitations imposed by the US government to the sale of advanced chips in Beijing. In fact, since 2022, US President Joe Biden has launched a series of export restrictions and blocks of American manufacturers towards China and the last squeeze came in October 2023. As a result, Nvidia cannot put the same microprocessors on the Chinese market that it sells in the West. Which is why he launched three at the end of 2023 ad hoc chips – less powerful – for China.
The most sophisticated product that the American giant markets in Beijing is the H20 chips. According to reports from ReutersHowever, this graphics unit would be penalized by a supply-demand dynamic which, in the first months of 2024, did not support prices. Simply put, there would be no shortage of chips in China at the moment, on the contrary, those in circulation would be sufficient. This would then have pushed Nvidia to revise al decline its rates.
In this context, Nvidia’s main Chinese rival takes center stage: Huawei. The company plans to increase shipments of its chip Ascend 910B in 2024 and benefits from the support of the Chinese government which urges local companies to buy Huawei chips instead of those made in the USA by Nvidia.
The weight of China between AI development and sanctions
A significant problem for Nvidia, if we consider that in the last financial year the Chinese market had an impact of around 17% of turnover overall of the company.
“Nvidia is walking a fine line and is working to find a balance between maintaining the Chinese market and US tensions,” he told Reuters Hebe Chen, market analyst at Ig. Moreover, Nvidia itself confirmed that the limitations imposed by Biden are a problem: during the presentation of the results for the first quarter of 2024, on Wednesday 22 May, the company’s top management warned that activity in China is “substantially” lower than to the past, due to sanctions.
“Revenues from our data centers in China have declined significantly from the level prior to the imposition of new export control restrictions in October,” the CFO said Colette Kress. And on the competition with Huawei he added: «We expect the Chinese market to remain very competitive in the future». (All rights reserved)
Posting time: 05/24/2024 10:13
Last update: 05/24/2024 12:18
