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Nvidia Struggles to Satisfy Chinese Clients While Chances of a Big Loss Arise

The reports say that Huawei’s AI chip model can play the role of a substitute for the A100 chip of Nvidia.

Jay Hicks

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AI and nividia

Nvidia, a prominent chip developer in the United States, finds itself in a tricky spot in terms of regulations. As a result of the respective difficulties, there are chances that it could go through a huge blow in terms of business within the Chinese jurisdiction.

At present, the firm is witnessing restrictions related to the export of cutting-edge AI chips. In this respect, it cannot offer the respective chips to clients in China because of US regulations.

Nvidia Focuses on Chinese Users amid a Looming Loss due to US Regulations

The restriction applies to the top chips of Nvidia. These chips have gained significant attention in terms of processing power as well as value for applications. The use cases of the respective chips take into account autonomous vehicles, data analytics, and AI research. The situation started back in the year 2022 when the authorities in the US implemented exclusive export control actions.

In this respect, the government has referred to the concerns regarding the likely use of these chips in military-related operations. The officials in the US government think that China could utilize the respective AI chips to enhance surveillance. Additionally, the other potential uses of these chips include weapons development as well as the rest of military applications. The prohibition may deter the progress of China in the AI sector.

Prominent Chinese Tech Entities Shift from Nvidia to Other Alternatives

Keeping this in view, Nvidia may witness a huge loss in the current situation. In this regard, most of the famous consumers such as ByteDance, Tencent, and Alibaba are making significant steps. These companies are moving toward native manufacturers of alternative chips to further their operations. Back in November last year, Reuters pointed out that Baidu (a top AI firm in China) ordered Huawei to provide Ascend AI chips.

Related: 3 AI Companies in China Release IPOs in the Jurisdiction of Hong Kong

The reports say that Huawei’s AI chip model can play the role of a substitute for the A100 chip of Nvidia. Hence, it can fulfil the requirement of such entities in the absence of Nvidia. As per WSJ, Huawei obtained a minimum of 5,000 orders throughout the year 2023 from top internet firms in China. The present situation shows that the tech company is still not capable of selling less effective chips to clients in China.

Company’s Recent Revenue Report Indicates a Significant Spike Throughout 2023

Nonetheless, those have a decreased demand in comparison with the high-performance chips. As a result of this, the huge extent of the loss in revenue in the case of such chips could impact the firm’s business. Back in October last year, the company reported its revenue in the 3rd quarter. It was at the place of up to $18.12B, showing a thirty-four percent rise from revenue in the previous quarter and a 206% rise from one year back.

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