Nvidia Faces Challenges in China as U.S. Bans Semiconductor Sales
The artificial intelligence revolution driven by ChatGPT and self-driving cars is causing a surge in demand for Nvidia’s chips in China. However, analysts are concerned as the US plans to ban the sale of high-end semiconductors to China. China is a key market for Nvidia’s big data center business and its chips for the electric car market, where Chinese companies dominate.
But, according to Nomura analysts, Nvidia’s chips for autonomous driving in cars do not appear to be impacted by the new US regulations. The Nvidia Drive AGX Orin chips meet some of the technical specifications outlined in the rules. However, they still fall short of a key performance metric and are not used in data centers. Therefore, the Orin chips remain safe and unaffected by the ban, suggesting that other auto chips should also be safe.
China-based electric automakers like BYD, Nio, Li Auto, and Xpeng are among the companies using Nvidia’s Orin chips. Xpeng, which offers a similar autonomous driving experience to Tesla in China, plans to hold a tech day soon.
Despite the challenges faced by Nvidia, other companies are emerging as competitors in the AI chip market. US-based Kneron is using a different approach based on neuroscience, and its revenue is forecasted to grow significantly. The company is working with Foxconn for the development of automotive AI. Kneron claims its KL730 chip is significantly more energy efficient than its counterparts and has already shipped millions of chips.
Moreover, testing AI models requires significant processing power, which can become expensive due to the chip shortage. Global cloud players charge $1-3 per hour for the use of Nvidia’s A100 80G chip.
While Nvidia seems to have a temporary pass for now, future advanced automotive chips may require a license from the US government to be shipped to China. Chinese companies are developing homegrown alternatives, such as Inceptio, which uses a chip from Horizon Robotics for its autonomous truck driving technology. Inovance, the largest factory automation supplier in China, has seen its market share grow due to the demand for new energy vehicles and automation.
The ban on semiconductor sales to China poses challenges for Nvidia, but there are still opportunities for growth as other companies enter the AI chip market.
What are your thoughts on the impact of the ban on Nvidia and the rise of competitors? Share your comments below!
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