NVIDIA's hot-selling H20 AI accelerator might be banned from being sold in China, as Beijing's new energy efficiency rules could result in Team Green taking a massive revenue hit.
NVIDIA Could See A Revenue Hit of Up To $20 Billion If H20 AI GPU Sees a Ban In China, Creating Further Complications
Well, NVIDIA's venture in China, especially with AI, has been a rollercoaster ride since the business has been subjected to geopolitical tensions, which means there have been restrictions in place regarding what Team Green could ship to China. This has mostly been from the side of the US. Still, it looks like things might change, as, according to The Financial Times, Beijing is reportedly considering imposing AI chip curbs in an attempt to reduce the influence of NVIDIA's chip over domestic markets and ultimately force companies to choose in-house options.
It is claimed that China's National Development and Reform Commission (NDRC) is planning to impose new rules on chips and data centers being used by Chinese companies, and one way they are planning to reduce the presence of NVIDIA's chips is by imposing "energy efficiency" rules. With the new policy being imposed, it is said that NVIDIA's H20 AI accelerator might be banned from being sold in the country, which means that Team Green's AI/DC revenue might take a massive hit since China accounts for a large portion of NVIDIA's AI sales.
NVIDIA has apparently already started responding to NDRC's planning, with the firm arranging a meeting with the body's commission chair, Zheng Shanjie. Along with this, NVIDIA might just further "cut down" the performance of the H20 AI accelerator to comply with the new energy rules, but it may not be as easy as it sounds, given that this move will make competitor options a lot more appealing compared to where they are right now.
When it comes to the competition NVIDIA faces in China, Huawei is said to be the biggest rival for now, and Jensen Huang has already admitted to this fact. He claims that the Chinese firm has made massive strides in the AI markets, and the firm's influence cannot be ignored. Huawei is planning to release its next-gen Ascend 910C chip soon, which is said to be similar to NVIDIA's H100 in performance, featuring SMIC's 7nm and much more.
NVIDIA is said to be earning around $20 billion in YoY revenue from China, and a large portion comes from the H20 AI accelerator. Given that it faces a restriction, it is imminent that Team Green would need to explore an alternative, that too, pretty quickly.
