Nvidia tumbles as China pushes toward an AI boom without the US juggernaut
What does an AI boom look like without Nvidia at its epicenter?
More and more, it seems that China is willing to test out those uncharted waters.
Shares of the $4 trillion chip designer are down more than 3% in early trading after The Wall Street Journal reported that Alibaba is developing a chip for AI inference tasks manufactured domestically, the latest in a series of signs that the country is looking to wean itself off of any dependence on Nvidia and US technology to develop its AI capabilities.
The Chinese AI market is of no small import to Nvidia. On the conference call following earnings this week, CEO Jensen Huang called it a $50 billion opportunity that he expects to grow at 50% per year.
But China has reportedly told its leading tech companies to forgo purchases of Nvidia’s H20 chips, citing data security concerns. These allegations regarding data security have been denied by Nvidia, and appear to reflect China’s desire to avoid having its AI development be beholden to the whims of US policymakers.
Nvidia had been effectively locked out of China’s AI market since mid-April, when export curbs were enacted, and didn’t receive licenses to ship H20 processors to the world’s second-largest economy until August. The chip designer reportedly halted production of these chips recently, which suggests that China’s directive to its tech giants has some teeth.
Without access to the most advanced technology, China will have to effectively make up for what it lacks in ability with volume.
This news also comes as other, smaller Chinese chipmakers begin to capture more attention from domestic investors. Cambricon, for instance, soared 15% to a record high earlier this week after reporting surging sales growth. Its share price more than doubled in a span of less than three weeks. Per the Financial Times, Chinese officials have told their biggest domestic chipmaker, SMIC, to devote some more capacity to Cambricon rather than give all the availability to Huawei Technologies, which is currently the country’s most advanced AI chip developer.
