We recently reported that NVIDIA has received permission to sell its NVIDIA H200 AI task processing chip to the Chinese market by the US government with certain conditions.
Recently, the Chinese government has introduced a new list confirming the companies allowed to supply AI data center equipment in China, especially for government projects.
According to this list, only two AI processing chip component suppliers are allowed to deal with the Chinese government, namely Cambricon and Huawei. Offers from foreign AI component manufacturers, especially AMD and NVIDIA, are not allowed to be used for the time being.
This is also nothing new. Since the tariff and trade war began between the US and China several years ago, the Chinese government has begun the process of developing its own technologies, especially in the semiconductor and AI arenas.
Where Chinese semiconductor chip manufacturer SMIC has begun to show progress in the semiconductor chip production sector, Cambricon and Huawei have also begun to create semiconductor chips that are increasingly catching up with offerings from AMD and NVIDIA.
Private sector companies in China are still seen using offerings from NVIDIA, especially due to several factors such as the processing power offered by NVIDIA AI chips is still more powerful than those offered by local companies, and they are seen competing with existing global market offerings, especially Tencent and Alibaba.
This is not to say that there are no advantages for Chinese companies to use local offerings. In the future, it is expected that AI processing components from the country can be seen to be able to compete with AMD and NVIDIA, and if they can be offered at a more affordable price, more and more companies will turn to reduce the cost of developing new AI systems.
The Chinese government is also seen to be giving a number of incentives to cloud service operators in China, such as a half-price discount on the amount of electricity used if they migrate to using components from local companies.
This is not to say that AMD and NVIDIA will be completely banned in China, but the reduction in demand from the Chinese market is something that will definitely affect the sales and profits of these American companies.
