Since its introduction to the Chinese market in mid-2024, NVIDIA’s H20 chip has experienced a remarkable 50% growth in quarterly sales.
This push is partly due to the company’s search, led by Jensen Huang, to adapt to the limitations imposed by the U.S. Department of Commerce.
However, this streak of success seems to have come to an end, as the same agency has imposed new restrictions on the export of the H20 GPU, which will severely impact NVIDIA’s future sales in China.
NVIDIA faces losses of $5.5 billion
With the imposition of these restrictions, it is estimated that the company will face a loss of 5.5 billion dollars, due to sales commitments and chip reservations that it will not be able to fulfill.
In light of this crisis, NVIDIA is working on new GPUs specifically tailored for the Chinese market, although this strategy has not been officially confirmed.
This is not the first time the company has attempted to launch lower-capacity chips as a temporary solution, and although this tactic worked in the past, its effectiveness has been limited.
The situation becomes even more complicated with Huawei’s entry into the artificial intelligence (AI) chip market. Huawei has introduced its Ascend 920 chip, designed to fill the gap left by NVIDIA’s H20 GPU.
In addition, the company is also in the testing phase with the Ascend 910D, which aims to rival the performance of NVIDIA’s H100 chip. This suggests that Huawei is determined to compete in all segments of the AI hardware market, both in inference and in model training.
With the tightening of restrictions by the U.S. government, Chinese companies like Alibaba, ByteDance, and Tencent face the dilemma of whether to continue investing in lower-capacity chips. The pressure on NVIDIA in the Chinese market is evident, and the future of its position in the region seems uncertain.