As the supply of AI chips developed by Huawei has not been smooth due to Nvidia’s rival, Chinese big tech companies are again competing to secure Nvidia chips. According to the industry on the 3rd, production is increasing significantly due to the recent surge in demand for AI chip H20 launched by Nvidia in the Chinese market in the first quarter of this year. H20 chip is currently Nvidia’s most high-performance AI chip for export to China. As the U.S. government tightened restrictions on AI semiconductor specifications that can be exported to China since October last year, Nvidia has released a series of chips for export to China that have lower computing performance. Chinese retailers began supplying a small amount of H20 products to their customers in the first quarter of this year and are increasing their supply from the second quarter. The main consumers of H20 chips are Chinese big tech companies. China’s four major cloud service providers, Baidu, Alibaba, Tencent, and ByteDance, have recently been competitively purchasing H20 chips, according to Morgan Stanley, an investment bank. In particular, these companies are said to be increasing orders for servers equipped with Nvidia’s H20 chips. According to the Taiwan Economic Daily, Taiwan Inventec, a provider of server and data center solutions equipped with Nvidia’s GPUs (Graphic Processing Unit), said orders for H20 servers are increasing rapidly from Chinese big tech companies.
Servers containing H20 chips have been in full production since the second quarter of this year. As orders are flooding, Inventec predicts that AI server shipments will more than double this year from last year. Chinese big tech companies are hoarding Nvidia chips because Huawei has rarely been able to increase production of its own AI chips. Since the U.S. sanctions have been tightened, Chinese big tech companies have moved some high-tech semiconductor orders to Huawei instead of Nvidia. As Nvidia’s H20 computational power is known to be only one-fifth of Nvidia’s flagship AI chip H100, demand for Huawei’s AI chip Ascend 910B, which was developed as an alternative to H100, surged. Some analysts said Nvidia’s H20 performance is less than half that of Huawei’s 910B. However, Huawei’s AI chip yield remains at 20 percent and imports of advanced semiconductor equipment are blocked, making it difficult to increase production.Taiwanese media said, “The delivery schedule of Huawei AI chips is being delayed, and as a result, Chinese cloud service companies’ plans to use Huawei’s chips to reduce their dependence on Nvidia have failed.” An industry official said, “The Chinese government has until recently issued guidelines to its big tech companies to reduce their purchases of imported chips, including Nvidia, but local companies are expected to continue to increase their purchases of Nvidia chip servers with stable supply for a while as these guidelines have not been strictly implemented yet.”
EJ SONG
US ASIA JOURNAL
