Key points
- Despite Beijing’s discouragement, Alibaba, ByteDance, and other Chinese tech firms are actively pursuing Nvidia’s AI chips.
- Strong demand exists due to limited domestic alternatives and the superior performance of Nvidia’s chips.
- Chinese firms are closely monitoring Nvidia’s upcoming B30A chip, anticipated to be significantly more powerful than the H20.
- The B30A’s potential price, approximately double the H20, is seen as acceptable given its performance capabilities.
Despite official discouragement from Beijing, major Chinese technology companies, including Alibaba and ByteDance, are continuing to procure artificial intelligence chips from Nvidia, according to four sources familiar with ongoing procurement discussions. This persistent demand highlights the significant challenges facing China in developing domestically competitive AI chip technology.
These companies are eager for assurances regarding the processing of their orders for Nvidia’s H20 chip, recently approved for sale in China. Their focus now shifts to the anticipated release of Nvidia’s more advanced B30A chip, based on the Blackwell architecture.
The B30A, pending US approval, is expected to command a price approximately double that of the H20, currently selling for $10,000-$12,000. However, sources suggest that Chinese firms view this higher price as justifiable, with the B30A projected to offer up to six times the processing power.
Both the H20 and the upcoming B30A are downgraded versions of chips sold internationally, tailored to comply with US export restrictions. The sources involved in these procurement discussions, however, requested anonymity due to the sensitivity of the matter.
The ongoing demand for Nvidia’s chips underscores the limitations of China’s domestic chip industry. Multiple sources within Chinese tech firms confirm that Nvidia’s chips outperform current domestic alternatives, which are offered by companies such as Huawei and Cambricon. This performance gap, coupled with the constrained supply of domestic options, fuels the persistent reliance on Nvidia’s technology, despite the regulatory pressure.
While Chinese authorities have expressed concerns and summoned companies for questioning regarding their Nvidia chip purchases, they have not yet issued outright bans.
Nvidia’s position in China is a critical element in the ongoing US-China tech rivalry. While the US initially imposed stricter restrictions, the current approach allows for continued sales to Chinese firms. This strategy aims to prevent a complete shift by Chinese developers to rival technologies, primarily from Huawei.
The situation remains complex, with Nvidia facing uncertainty regarding the long-term outlook in China, leading to a cautious sales forecast that excludes potential revenue from the country. Despite this, Nvidia executives remain confident in the continued demand for their products in the Chinese market, which, if fully accessible, could be worth an estimated $50 billion to the company.
