NVIDIA is poised to make a staggering $12 billion from China through the sale of AI chips, despite facing challenges due to US sanctions. The company’s H20 chip, priced at $12,000 to $13,000 per unit, is projected to drive substantial revenue, potentially exceeding the $12 billion mark in sales.
Amidst strict US export controls targeting the flow of powerful chips to China, NVIDIA is expected to deliver over a million units of its H20 chips to Chinese customers in the coming months. These chips have been strategically developed to circumvent these restrictions, showcasing NVIDIA’s resilience and strategic acumen in navigating the complex geopolitical landscape.
Despite concerns from the US government regarding the potential military applications of advanced AI chips in China, NVIDIA’s impressive sales figures in the country reflect its ability to adapt and continue serving the Chinese market effectively. This success contrasts with the challenges faced by Chinese tech companies like ByteDance, Tencent, and Alibaba, as they grapple with limitations on competing with their US counterparts due to export controls.
While these hurdles pose obstacles, NVIDIA’s focus on serving its Chinese customers remains unwavering. The company’s finance chief, Colette Kress, noted a significant downturn in revenue from the data centre segment in China preceding the export restrictions in 2022. However, sales forecasts for the H20 chip indicate strong demand and performance, setting the stage for substantial revenue generation.
Despite the impact of export controls on NVIDIA’s China business, the company’s strategic shift towards marketing chips tailored for the Chinese market has proven successful. The H20 chip is gaining popularity among Chinese customers, with strong demand observed for H20 clusters, as noted by analysts at Morgan Stanley.
In comparison, Huawei is projected to sell around 550,000 units of its Ascend 910B chips during the same period. However, production challenges faced by the company and its partners in meeting demand, coupled with the ecosystem built around NVIDIA’s infrastructure by Chinese AI companies, highlight the significant lead enjoyed by NVIDIA in the market.
As NVIDIA continues to navigate geopolitical challenges and adapt to evolving restrictions, its resilient approach and robust sales of AI chips in China underscore its pivotal role in the global semiconductor market. The company’s strategic maneuvers and customer-centric focus position it for continued success amidst a complex landscape of regulatory controls and market dynamics.
