Nvidia has reportedly instructed component suppliers, including Samsung Electronics Co and Amkor Technology, to cease production related to its H20 AI chip. This information comes from a report by The Information, citing unnamed sources. The decision follows reported pressure from Beijing urging local companies to favour domestic chips over foreign alternatives. Nvidia is a leading designer of graphics processing units (GPUs) that enhance experiences on computing platforms. The company’s products drive innovation across a wide array of fields, from gaming to artificial intelligence.
Both Nvidia and Advanced Micro Devices (AMD) recently obtained approval from Washington to resume sales of lower-end AI chips to China. This approval was granted under the condition that they give the US government a 15 per cent cut of the associated revenue. This arrangement has faced legal and ethical scrutiny. However, both companies now encounter the challenge of Chinese customers facing pressure to procure domestically produced chips instead of foreign ones.
The move to halt production of the H20 chip reflects the complexities of navigating the current geopolitical landscape and the growing emphasis on self-sufficiency within the Chinese technology sector. The preference for local chips poses a significant hurdle for Nvidia and AMD as they attempt to maintain their market presence in China. The situation highlights the increasing competition and regulatory challenges facing international technology companies operating in China.
The Information’s report underscores the dynamic nature of the AI chip market and the strategic importance of government policies in shaping industry trends. With Chinese firms being encouraged to prioritise local products, Nvidia and AMD face an uphill battle in sustaining their market share and revenue streams from the Chinese market.
