Chinese Competitor Could Cause Big Trouble for Nvidia During Tariff Battle
Chinese company Huawei may offer strong competition to Nvidia in the near future with its AI chips that are on par with what Nvidia sells.
Quick overview
- Nvidia faces competition from Huawei, which is set to release AI chips that could impact Nvidia's market share in China.
- The Trump administration's trade restrictions have led to a ban on Nvidia's profits being shipped to China, causing a significant drop in Nvidia's stock price.
- Huawei's upcoming 910C chips are comparable to Nvidia's H100 GPU chips, potentially allowing them to undercut Nvidia in the Chinese market.
- Nvidia's current offerings in China are outdated, and without a competitive product, they risk losing their foothold in the rapidly growing AI market.
Nvidia (NVDA) has some competition in China from tech company Huawei, which will be delivering AI chips possibly as soon as May of this year, and the news has caused a significant drop in the Nvidia stock price.
Nvidia is dealing with a ban on its profits being shipped to China as the Trump administration restricts trade between the two nations. In particular, the ban hammer has come down on artificial intelligence chips, and Nvidia is the number one AI company in the world. China is one of their biggest customers, and Nvidia is already prepared to pay billions in fines each year to ship its products to China anyway.
If they have a strong competitor in China, though, then that competitor can afford to undersell them and drive them out of the lucrative market. Nvidia stock is down 6% in Monday’s trading, continuing days of decline for the tech company.
How Competitive is Huawei’s Product?
Huawei is very close to releasing its new 910C chips onto the market, with sales expected as early as next month. The chips they will be offering are on par with the H100 GPU chips that Nvidia used to sell and that are included in the ban between the U.S. and China. Compared to the current Blackwell chips that Nvidia sells outside of China, these Huawei chips are about two generations behind.
The chips that Nvidia sells to China currently are not top of the line and are well behind their current chips. So, if Huawei can make a chip that is comparable to the Blackwell chips, then Nvidia will be in serious trouble. As the situation stands, though, Huawei can offer something very similar to what Nvidia already offers in China. If they can do it cheaper, they may corner the market there, and the AI market is growing extremely rapidly in China and the surrounding countries.
Nvidia is already facing bans from the U.S. over the chips it currently sells to China. They are looking to pay the fines associated and still sell the same chips, but even that may not be enough for them to hold not their market share in China for much longer.
Until Nvidia can release a product to sell to China that will not be banned and that can be sold at a comparable price to the Huawei chip, Nvidia may lose much of that market. They also have to consider the wisdom of paying billions of dollars in fines just to hold onto that region.
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