China is now advising AI startups to refrain from acquiring AI chips from NVIDIA to reduce the influence of US policies over the regional markets.
China Is Taking Measures To Bring Production of AI Compute Power To Domestic Markets, Urges Startups To Switch To In-House Alternatives
The Biden administration gave it all to suppress the growth of the AI industry in China, whether that involves restricting local semiconductor developments or even amending export policies to refrain from China getting access to high-end AI hardware. While China did find multiple workarounds to such US policies, such as GPU renting and leveraging black markets, the AI tech giants such as ByteDance and Alibaba were heavily influenced by the restrictions, ultimately creating new troubles for governments and the growth of AI-focused businesses.
Bloomberg now reports that Chinese regulators are recommending AI startups stop buying NVIDIA's H20 AI accelerators, citing that a potential ban would create new problems for such businesses. This move is an attempt to push Chinese AI startups onto the global frontiers without them relying on technology from the West and instead focusing on resources available through in-house sources.
We recently reported on the possibility that the US government might ban the export of NVIDIA's H20 AI GPUs to China despite them being "China-compliant" initially. Not just this, but the Biden administration has taken several efforts to thwart the Chinese AI markets by banning a series of NVIDIA's accelerators and equipment, such as the A100s and the H100s. In light of this, multiple firms, such as Huawei and Birentech, have presented their in-house solutions for the markets, and they have gained decent sales traction in the past, but dependency on NVIDIA is still huge.
The importance of Chinese consumers to NVIDIA is immense, given that the region accounted for 12% of the firm's quarterly revenue, at around $3.7 billion. So, Team Green can't afford an all-out export ban, but looking at how the situation is proceeding, either NVIDIA would have to introduce a compliant solution every time it sees a policy revision, or they might have to bid farewell to their business in China.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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