Nvidia is set to resume exports of its H20 chips to China after the ban in April. The Trump administration gave the company assurances last month, calling for a new fully compliant made-for-China chip. Analysts from brokerage firm Bernstein believe it will be hard for Nvidia to regain its previous market share, despite hopes of H20s returning to the Chinese market. According to the firm’s recent report, the tech company’s AI chip market share in Beijing would fall from 66% in 2024 to 54% in 2025. Nvidia expects a drop in market share despite resuming exports to China Bernstein analysts argued that U.S. export controls have shifted reliance to domestic AI processor vendors in China. The firm noted that domestic vendors such as Huawei , Cambricon, and Hygon are not competing with the most advanced global alternatives. The research firm predicts that local Chinese AI firms will grow from 17% in 2023 to 55% by 2027. The Futurum Group CEO, Daniel Newman, also believes Nvidia’s market share drop from its customers might have been diverted to Chinese alternatives during the H20 controls. Nvidia CEO Jensen Huang has been advocating for more access to the Chinese market, arguing that export regulations were limiting U.S. tech leadership. Rera Goujon, director at Rhodium Group, also acknowledged that including U.S. technology companies in the Chinese market can help it grow its geopolitical leverage. The Rhodium Group reported last month that the initiative could see the administration ease its export restrictions to allow U.S. chipmakers greater access to Beijing. Goujon also highlighted that China isn’t expected to slow its efforts in advocating for companies to use localized AI products. Ray Wang, research director for semiconductors, supply chain, and emerging tech at The Futurum Group, believes that Chinese customers like Bytedance, Baidu, Tencent, and Alibaba still prefer Nvidia’s AI products. Su Lian Jye, chief analyst at Omdia, maintained that Chinese companies have been purchasing more locally produced chips amid geopolitical tensions. Wang argued that Nvidia’s growing edge over its Chinese rivals, with advanced hardware with large memory bandwidth, makes it a preferred option. He also noted that the Chinese firm’s rivalry with Huawei fuels its preference for Nvidia’s products. H20 chips raise security concerns for both China and the U.S. Lutnick said exports of H20 chips to China pose a national security threat in the wake of the potential resumption of sales to Beijing.. He believes China’s People’s Liberation Army could deploy U.S. chips and AI models. “As policymakers and professionals with a background in national security policy, we believe this move represents a strategic misstep that endangers the United States’ economic and military edge in artificial intelligence (AI). – Howard Lutnick , U.S. Secretary of Commerce. Cyberspace Administration of China reported that the U.S. tech giant’s officials met with Chinese officials last week to discuss national security concerns posed by the H20 chips. There were also concerns that U.S. controls would allow tech firms such as Nvidia to include potential backdoors, making it easy for the U.S. to track them. The CAC expected Nvidia to provide relevant supporting documentation regarding security risks associated with its H20 chips sold to China. The regulator argued that the U.S. tech firm has been reported to contain tracking and remote shutdown technologies. Nvidia refuted claims that its hardware could include security mechanisms and location verification to allow external access or control. Charlie Dai, vice president and principal analyst at advisory firm Forrester Research, believes that such restrictions would lead to Chinese companies temporarily curbing the adoption of U.S.-made chips due to fears of potential vulnerabilities and regulatory uncertainty. U.S. Senator Tom Cotton and other U.S. officials introduced the U.S. Chip Security Act. The legislation would require tech companies such as Nvidia to include security mechanisms and location verification in their chips. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
