NVIDIA Cuts H20 AI Chip Prices for China Market

NVIDIA's launch of its cutting-edge AI chips for the Chinese market has encountered early challenges, according to informed sources. The company has reduced prices for its H20 chip due to an abundant supply, indicating a lower-than-expected demand.

In the fiscal year 2024, the Chinese market accounted for 17% of NVIDIA's revenue. The price stabilization of its AI chips highlights the obstacles NVIDIA faces in China, raising concerns about its future performance in the region.

Increasing competition in China has also raised alarms among NVIDIA investors. Despite announcing strong revenue forecasts on May 22, which fueled the company's impressive stock rally, the competitive landscape remains a significant challenge.

NVIDIA introduced three custom chips specifically designed for the Chinese market at the end of last year. The H20 chip, being the most powerful NVIDIA product available in China, has received the most attention. However, three supply chain insiders reported that the market is well-stocked with H20 chips, suggesting weak demand.

NVIDIA's Chief Financial Officer, Colette Kress, remarked, "Our data center revenue in China has significantly decreased compared to before the new export control restrictions were implemented in October last year. We anticipate that the Chinese market will remain highly competitive in the future."