Nvidia’s (NASDAQ:NVDA) advanced AI chip for the Chinese market is facing stiff competition in the country. The H20, Nvidia’s AI chip, is off to a weak start, with an oversupply driving its price below that of Huawei’s rival chip, according to a Reuters exclusive report.
This price drop highlights the challenges Nvidia faces in China due to U.S. sanctions and increased competition. China accounted for 17% of Nvidia’s revenues in FY24. The report stated that Nvidia’s H20 chips are priced at around 100,000 yuan per card, while Huawei is selling its 910B at around 120,000 yuan per card.
Nvidia’s AI Chips in China
Nvidia, which dominates the AI chip market, launched three chips for China last year after U.S. sanctions prevented the export of its most advanced semiconductors. The H20 chip, Nvidia’s most powerful in China, is in abundant supply in China, indicating weak demand for the chip, according to the report.
As a result, Nvidia’s H20 chips are being sold at over a 10% discount compared to Huawei’s Ascend 910B chip.
This could further threaten the company’s market share of the AI chips market in China. Indeed, Nvidia’s management stated on its Q1 earnings call that the U.S. sanctions have “substantially” dragged down its business in China.
According to Reuters, citing data from CCID Consulting, China’s share of the global AI industry is likely to exceed 30% by 2035. It remains to be seen how Nvidia will rise to the challenge posed by Chinese tech companies like Huawei.
What Is the Target Price for NVDA?
Analysts remain bullish about NVDA stock, with a Strong Buy consensus rating based on 37 Buys and three Holds. Year-to-date, NVDA has surged by more than 100%, and the average NVDA price target of $1,181.29 implies an upside potential of 13.8% from current levels.
