Nvidia’s stock price has plunged, and rivals of the Chinese chipmaker have also soared after the Chinese government reportedly discouraged Chinese AI companies from buying Nvidia’s chips.
Bloomberg reported Friday that Chinese regulators have guided AI companies away from Nvidia’s H20 chips. These aren’t Nvidia’s most advanced AI chips, but they are the most powerful the company can sell to China under U.S. export restrictions. Aiming to hold back China in the AI race.
The new product immediately pushed Nvidia’s stock price down by 2.2%. In pre-market trading on Monday, the AI chip leader fell another 2%. Nvidia’s suppliers and contractors, including Samsung, SK Hynix, Micron and TSMC, also fell.
The decline weighed on the broader market this morning, with Nvidia, whose stock price has more than doubled this year, playing a big role lately.
But for Chinese semiconductor companies, which were supposed to be the beneficiaries of Beijing’s guidance, the story was much different.
Shares in Cambricon and Semiconductor Manufacturing International (SMIC), both partly owned by the Chinese state, soared 20% on Monday, hitting the Shanghai exchange’s daily limit. Nowra Technology Group, which makes chip manufacturing equipment, saw its stock price jump 9.8% in the Shenzhen market.
Years of Western export controls have had some success in slowing progress in China’s AI efforts, denying Chinese companies the latest and greatest chips and holding back cutting-edge production equipment. This makes it difficult for Chinese chip companies to catch up.
For example, Huawei’s progress was set back two years by the redesign required to produce its AI chips locally, and the performance of its recent Ascend 910B chip was limited by production issues at contract manufacturer SMIC. There is a possibility that
On Monday, Reuters reported that multiple sources reported that TikTok’s parent company ByteDance plans to use the 910B chip to train its next model. ByteDance is reportedly already using these chips for inference (essentially running AI models), but whether they’ll be used for more compute-intensive training tasks is another question.
ByteDance denied that it was working on a new model. Nevertheless, if the Reuters report is accurate, it once again points to the limits of what Chinese chipmakers can currently achieve. A source told the newswire that Huawei was delivering the 910B chip too late for ByteDance’s needs.
However, export restrictions have forced China’s chip sector to adapt and work faster. The Information Technology Innovation Foundation (ITIF), a major tech industry lobby, warned earlier this month that “U.S. efforts to slow China will not work in the long term.”
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