Photographic illustration of the NVIDIA H20 chip.
Vcg | Visual China Group | Getty images
NvidiaIt is likely that H20 chips return to China, but technology experts do not expect them to meet the same fanfare in the market in the light of the new competition and regulatory scrutiny.
The Trump administration last month gave Nvidia guarantees that it would be allowed to resume sales of its H20 chips to China, after its exports had effectively banned in April. He also announced a new “fully compatible” chip made for China.
The measure was seen as a great victory for the company, which had marked billions in losses due to politics. But while H20 could be returning to the Chinese market, which does not mean that Nvidia recovers its old market share, analysts warn.
In a recent report, the Global Research and Shares of Actions Bernstein predicted that the NVIDIA AI CHIP Mercado share in China would fall to 54% in 2025, from 66% of the previous year.
This fall is only due to complications with the supply of resumption chips, since Chinese chips manufacturers have been taking more from the internal market boom.
“US export controls have created a unique opportunity for national AI processors providers, since they do not compete with the most advanced global alternatives,” said Bernstein’s report, pointing out a growing prominence of Chinese players such as Huawei, Cambricon and Higon. “The Location of the Chips Market of China will increase from 17% by 2023 to 55% by 2027”.
Other analysts such as the CEO of the Futurum Group, Daniel Newman, were more optimistic about the Nvidia rebound in China. However, he also marked the potential erosion of the market share of Nvidia customers that could have found success with Chinese rivals, while H20 controls were in their place.
It is also worth noting that Bernstein’s predictions assume that the broader restrictions of chip in the United States will remain greatly unchanged. That creates a dynamic where Chinese companies continue to develop and offer advanced chips, possibly eroding the demand for outdated offers from the United States.
More relaxing?
Before reverting H20 restrictions, the CEO of Nvidia, Jensen Huang, had been pressing for more access to China, claiming that export controls inhibited US technological leadership.
While Trump administration officials said that reversal was part of commercial negotiations, analysts have echoed Nvidia’s basic argument that Chips controls for the China market should be relieved, thus creating more dependence on US technological offers.
“The assumption is that by keeping American technology companies in the Chinese game, the United States can preserve and even increase their geopolitical influence,” Reva Goujon, director of Rhodium Group, told CNBC.
In a report last month, Rhodium Group said that this logic can see that the administration changes to a “sliding scale” approach for export restrictions that could allow the United States chip manufacturers for greater access to China as Huawei and other Chinese chip manufacturers continue to update.
However, while Chinese IA developers will be happy to have greater access to Nvidia chips, Beijing is not expected to delay their efforts to lead companies towards the infrastructure of their own harvest, according to Goujon.
He pointed out that the administration of the cyberspace of the recent citation of China to Nvidia was an obvious sign of the intention of the State to intervene in the local market of infrastructure of AI.
New Beijing scrutiny
According to the administration of the cyberspace of China, Nvidia met with Beijing officials on Thursday regarding national security concerns raised by the H20 chips, including the possible rear doors that would allow the parties in the USA.
Beijing’s movement seemed to be a response, at least partially, to the new laws proposed in the United States that would require semiconductor companies such as NVIDIA to include safety and verification mechanisms of location in their advanced chips. Nvidia then denied that their chips have “rear doors” that allow external access or control.
Beijing’s movement was also an attempt to create some doubts among Chinese IA developers looking to buy the new H20, according to Newman from Futurum.
“China wants to leave some levers in their place to potentially restrict chips out of AI at some point at some point and when you feel that your own harvest technology is really competitive,” said Newman.
Beijing has previously restricted the business of American chip manufacturers in China in the midst of periods of intense technology and commercial tensions between the two countries. Micron Technology, for example, failed a cybersecurity review in 2023 and was subsequently blocked from the critical IT infrastructure.
“The continuous complexity of China-United States commercial relations could bring more complications [for Nvidia] As the negotiations already measure that China tries to consolidate their own AI strategy, “Newman added.
