The world’s most valuable chipmaker, Nvidia, identified its Chinese rival Huawei as a top competitor for the first time, in a filing with the US securities regulator this week.
The disclosure comes at a time when the US chipmaker is starting to sample two of its new, slower artificial intelligence (AI) chips in China, in a bid to defend its market dominance in the country.
But top Chinese cloud firms have previously told Nvidia they don’t want its slower AI chips — designed to meet Washington’s export curb requirements. Many of those firms told the US chipmaker they would prefer using homegrown chips from companies such as Huawei.
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In its annual report filing with the US Securities and Exchange commission on Wednesday, which forecast a roughly threefold surge in quarterly revenue, Nvidia named Huawei as a rival in several categories.
The company said China’s Huawei competes in supplying AI semiconductors such as graphics processing units (GPUs), central processing units (CPUs) and networking chips.
It also identified Huawei as a cloud service company designing its own hardware and software to improve AI computing.
Huawei’s Ascend series of chips is largely seen as China’s only rival to Nvidia’s line of AI chips.
Top Chinese AI and cloud firms such as Baidu and Tencent have been stocking up on Huawei’s Ascend 910B chip as an alternative to Nvidia’s powerful A100.
Many Chinese AI players have also ramped up their own chip product launches, anticipating that US export curbs will only tighten further and push Nvidia’s existing client base to seek alternate suppliers.
Nvidia had commanded a 90% share of China’s AI chip market until Washington’s curbs throttled its business in the country. Analysts have estimated China’s AI chip market to be worth $7 billion.
Sampling new chips
In a bid defend its market in China, Nvidia has begun offering customers samples of its two new artificial intelligence chips.
“We’re sampling it with customers now. Both of them comply with the regulation without a licence. We’re looking forward to customer feedback on it,” Nvidia CEO Jensen Huang told Reuters on Wednesday.
“We’re expecting that we’re… going to go compete for business, and hopefully we can serve the market successfully.”
Huang did not mention the names of the chips or the customers.
The chip industry newsletter, SemiAnalysis, reported in November that Nvidia was preparing to release three chips – H20, L20 and L2 – for the China market.
The chips include most of Nvidia’s newest features for AI work, but have had some of their computing power cut back to comply with new US rules, according to the newsletter’s analysis of the chips’ specifications.
Nvidia has started taking pre-orders for the H20 chip, the most powerful of the three chips aimed at the Chinese market. Its distributors are reportedly pricing it on par with a Huawei’s Ascend chips.
The H20 was originally expected to be released in November but has been delayed due to issues server manufacturers were having in integrating the chip.
China chip sales chopped
During the earnings call, Nvidia’s Huang also revealed the extent of the hit to the chipmaker from tightening US restrictions.
For the fiscal fourth quarter which ended on January 28, Nvidia recorded sales of $1.9 billion in the China market, which includes Hong Kong, according to calculations by Reuters.
That amounted to about 9% of total sales, down from 22% in the previous quarter when it reported $4 billion in sales in the region.
“This last quarter, our business significantly declined as we… stopped shipping in the marketplace [for China],” Huang said during the call.
“We expect this quarter to be about the same. But after that, hopefully, we can go compete for our business and do our best, and we’ll see how it turns out.”
- Reuters, with additional editing by Vishakha Saxena
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