Nvidia CEO Huang visits China
NVIDIA President and CEO Huang traveled to China unannounced last week to visit Nvidia’s offices in Beijing, Shanghai and Shenzhen in South China’s Guangdong province. This was Huang’s first visit to the Chinese mainland in several years.
He did not meet with government officials or release major business announcements. Huang’s main purpose was to “have a good time” with Chinese employees, Nvidia confirmed to financial media outlet yicai.com on Sunday.
Huang’s “quiet” visit to the mainland could probably be aimed at appeasing clients, as the mainland market is too big to simply cede to a competitor.
Meanwhile, customers from the mainland are not satisfied with Nvidia’s redesigned chips specifically for the Chinese market due to US chip export controls. Nvidia needs to constantly adjust its strategy to adapt to the changing market environment, industry insiders said.
Huang may want to personally understand the situation of the Chinese market in order to better adjust the company’s strategy and products, Zhang Xiaorong, director of the Beijing-based Cutting-Edge Technology Research Institute, told the Global Times on Sunday.
The size of the artificial intelligence (AI) chip market in the mainland is about $7 billion, and Nvidia’s market share is more than 90 percent, according to Reuters.
In the past two years, the US government has imposed export controls on Nvidia’s highend AI chips to the Chinese mainland.
According to Nvidia’s financial results, revenue in the Chinese market, including the mainland, Hong Kong and Taiwan, accounted for 47 percent of its total during the period from February 2022 to January 2023.
However, for the fourth quarter in 2023, Nvidia said its sales in the Chinese market were expected to have declined significantly.
On January 8, Nvidia unveiled three new desktop graphics chips at the
Consumer Electronics Show in Las Vegas, saying that the capabilities of its new products wouldn’t trigger rules put in place by the US government to limit the export of AI-related chips to China, according to Bloomberg.
Nvidia plans to begin mass production in the second quarter of 2024 of an AI chip it designed for China to comply with the latest US export rules, Reuters reported, citing people familiar with the matter.
“Huang’s trip may have been in response to US government restrictions on Nvidia’s exports of chips to China. Nvidia may need to seek cooperation with local Chinese players to ensure that its products have access to the Chinese market,” said Zhang.
Forging closer partnerships with Chinese companies will also help Nvidia stay competitive in the global market, as the supply chain in China is becoming more and more complete and mature, Zhang noted.
Huang’s trip may have had something to do with Chinese tech giants such as
Alibaba and Tencent, Nvidia customers that have been turning to local semiconductor suppliers, a Shenzhen-based industry insider who declined to be identified told the Global Times on Sunday.
“These tech companies are shifting some of their chip orders to local companies to reduce their dependence on US chipmakers. Therefore, Huang’s visit to China may be aimed at forging partnerships with these companies to maintain Nvidia’s market share in China,” the insider said.
More and more Chinese companies are seeking chips from domestic producers, amid tough semiconductor export restrictions to China imposed by the US. The reliance on imported chips was thus largely reduced.
According to statistics from the General Administrative of Customs of China, the country imported 479.5 billion chips in 2023, down 10.8 percent year on year, with a value of $349.4 billion, down 15.4 percent from 2022.