Nvidia CEO, president and co-founder Jensen Huang has a serious warning for U.S. chipmakers. When it comes to AI chips, China is just “a few nanoseconds” behind the U.S. Huang states, a proclamation that can’t make companies including AMD and his own Nvidia feel good. Like the U.S., China has been looking to become self-sufficient when it comes to chips. However, unlike the U.S., China faces sanctions from the U.S. which makes it hard for China’s foundries to obtain much needed equipment such as cutting-edge lithography machines which make the production of chips under 5nm possible.
Huawei’s AI accelerator chips have the top market share in China
Despite being handicapped, Huawei has made a remarkable comeback and its Ascend 910B processors are considered the top domestically produced AI accelerator made in China. Nvidia was originally barred by the U.S. from selling its GPUs in China but the U.S. made a mistake doing that as it allowed Huawei’s Ascend 910B to take business away from Nvidia in China. The U.S. plan was to prevent China from obtaining Nvidia’s GPUs but since the company was getting hurt by not being allowed to sell in China, during the summer the U.S. changed its policy and has allowed sales of Nvidia’s H20 chips (not its most powerful) in China.
Chinese tech companies are believed to favor Nvidia’s computing platform, known as CUDA (Compute Unified Device Architecture). CUDA allows developers to take advantage of the parallel processing used by Nvidia’s GPUs to process large amounts of data at one time. With AI, billions and trillions of operations are taking place at the same time. Chinese firms Baidu, Tencent, and Alibaba are rallying around a CUDA-free ecosystem. Nvidia’s Huang suggests open competition and worries that reigning in China will lead to an economic whiplash for the U.S.
20%-25% of Nvidia’s datacenter revenue came from China
China benefits from state funding of semiconductor companies, a large pool of talent, and demand from Baidu, Alibaba, Tencent, and ByteDance. These advantages make up for some of the sanctions that the U.S. has placed on Chinese chip production.
Nvidia says that 20%-25% of its revenue from datacenters came from China. However, before the U.S. changed its mind allowing Nvidia to sell some chips in China, there is concern that China is moving to domestic alternatives for AI accelerators as U.S. suppliers like Nvidia are still banned from selling their best performing chips to China.
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