The trade war between the United States and China has cooled somewhat after Presidents Trump and Xi met in South Korea. Some tariffs and export restrictions have been lifted to ease tensions. But the topic of using NVIDIA's artificial intelligence (AI) chips has not been touched upon, and Trump said yesterday that the powerful Blackwell chips would not be offered to "other people".
Now the Financial Times reports that the Chinese government will offer a 50% cut in electricity costs to local companies that stop using NVIDIA chips. Companies using local chips from Huawei and Cambricon are eligible for the cut. Among the companies that may take up the offer are ByteDance, Alibaba and Tencent.
The recommendation not to use or try NVIDIA's new chips was issued by Chinese authorities last month in protest at the less powerful chips being sold to local companies. As a result of the export restrictions imposed by the United States, NVIDIA's market share in China is now zero, down from 90%, according to the company's CEO Jensen Huang a few weeks ago.
To compete with NVIDIA's chips, Huawei is producing the Atlas 950 SuperCluster AI data center computer that is equipped with more chips to offer higher performance. This results in higher electricity costs for the same task. Electricity subsidies are China's solution to this issue until local companies are able to produce chips that are truly comparable to NVIDIA.
