Nvidia lowers China AI chip costs in response to Huawei's rivalry

Due to fierce competition from local businesses, particularly Huawei, Nvidia has been forced to offer artificial intelligence processors in China at steep discounts, according to a story published by Reuters on Friday.

In the midst of US restrictions that stopped the company from selling its most sophisticated AI chips in China, NVIDIA unveiled three specially designed AI processors for the nation last year.

According to a Reuters story, the most powerful of the three, the H20, was encountering muted demand in China and was sometimes being offered at a price more than 10% lower than a comparable Huawei product, the Ascend 910B.  

Limited government data was used by Reuters to report that state-backed firms were placing far more orders for the Ascend 910B than the H20. This followed Beijing's directive for state-run businesses to employ silicon produced in China.

The most sophisticated AI chip made in China, the 910B, has become extremely popular there as a result of U.S. restrictions that were intended to prevent China from gaining access to the newest developments in AI.

There are additional challenges for Nvidia's operations in China as a result of its popularity there. With the imposition of US sanctions, the chipmaker has found it difficult to keep a presence in Chinese markets.

This week, the business reported its first-quarter profits, warning that the Chinese market was getting more competitive and that the company's data centre income had "significantly" decreased there.

Significant markdowns on the H20 also put additional pressure on Nvidia's margins.

(Sources: investing.com, reuters.com)