Key Takeaways
Huawei is reportedly working on developing new artificial intelligence (AI) chips to compete with those from Nvidia (NVDA) amid tightening U.S. export controls on semiconductor technology.
The Wall Street Journal reported on Tuesday that the China-based tech company’s new chips could take away market share lost by Nvidia due to U.S. trade restrictions affecting AI chips.
Geopolitical tensions threaten Nvidia’s Chinese market share
To comply with U.S. export controls, Nvidia offers its H20 chips in China, a version of the H200 it offers to American customers, which can run AI workloads with less computing power.
The restrictions mean Chinese companies can’t get their hands on Nvidia’s long-awaited Blackwell AI chips, but there are reports that Nvidia is working on developing new AI chips that comply with export rules.
What does Huawei’s new AI chip mean for Nvidia?
While some expect Huawei’s new AI chips to eat into Nvidia’s market share in China, others say the impact will be minimal.
Semianalysis analysts said that if Huawei makes more powerful AI chips and trade restrictions continue, “Nvidia will rapidly lose market share in China,” The Wall Street Journal reported.
But Jefferies analysts said they expected little impact because “NVIDIA is already heavily restricted in China and there is nothing to ban it from.” Nvidia’s AI chips for the Chinese market have been criticized for being less powerful than Huawei’s products, but both lag behind Nvidia’s products in the U.S. market.
The analysts added that there was a “widespread expectation” that Nvidia’s H20 chips could also be banned, which would put pressure on Nvidia’s share of the region’s AI chip market.
Nvidia shares were up more than 5% to $115.39 in afternoon trading on Tuesday, more than doubling in value since the beginning of the year.
