The United States issued new regulations in October last year to prevent Nvidia from selling cutting-edge artificial intelligence (AI) chips to China. However, Nvidia quickly developed special chips for China and continued to sell chips in the Chinese market without violating regulations. However, Nvidia now faces a more troubling problem: China's major cloud computing customers are not actively buying performance-downgraded chips.
People familiar with the matter said that large Chinese cloud computing companies such as Alibaba Group and Tencent have been testing special chip samples from Nvidia since November last year. They have told Nvidia that the number of chips they order from Nvidia this year will be far less than the previously planned purchase of Nvidia's high-performance chips that have been banned.
In the short term, the performance advantage of Nvidia's downgraded chips over local Chinese products is shrinking, making domestic chips increasingly attractive to buyers. Alibaba and Tencent are shifting some advanced semiconductor orders to local companies and relying more on chips developed in-house, people familiar with the matter said. The same is true for Baidu and ByteDance.
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