Nvidia, a prominent player in the advanced chips market, has identified Chinese tech giant Huawei as a key competitor for the first time. This development highlights the evolving global landscape surrounding the cutting-edge chips that are set to drive future artificial-intelligence technologies.

The Competitive Landscape

In its recent annual report submitted to the Securities and Exchange Commission, Nvidia acknowledged Huawei as a current competitor in four out of five key fields. These include AI-related graphics processing units, cloud services companies developing AI-related chips in-house, Arm-based central processing units, and networking products.

Potential Challenges Ahead

Nvidia's report highlighted the possibility of new competitors or alliances forming, which could potentially disrupt existing market dynamics. Chinese tech companies Alibaba and Baidu were also named as competitors in the field of cloud services.

Shifting Dynamics

Previously a major supplier of chips to Chinese firms, Nvidia's relationship with the region underwent a transformation following Huawei's inclusion on a U.S. trade sanction list in 2019. The company's financial performance was impacted by reduced sales of AI chips to China, attributed to government restrictions imposed by the U.S.

Nvidia refrained from commenting on its acknowledgment of Huawei as a competitor, signaling a potential shift in the competitive landscape of the chip industry.

China Boosts Efforts for Independent Semiconductor Industry

In the midst of limited access to Nvidia and other U.S. chip makers, China is ramping up its endeavors to establish a more autonomous semiconductor industry.

Huawei's Pursuit for Domestically Made Chips

Huawei, a prominent player in AI within the country, has been working on developing a range of "domestically made substitute" chips designed to replace Nvidia's offerings. As stated by Bernstein's senior research analyst Qingyuan Lin, the primary battleground between Huawei and Nvidia lies in AI chip-making.

Chinese Companies Face Obstacles

Chinese companies currently face restrictions accessing Nvidia's A100 chips, which are utilized in some of the most advanced data centers globally for AI applications, along with the more sophisticated H100 series.

Past Collaborations and Future Competition

The relationship between Nvidia and Huawei was last publicly referenced in a quarterly report from 2017, where it was mentioned that Huawei would leverage Nvidia's Volta HGX architecture to construct AI systems for data centers. Additionally, Huawei was included as a partner in Nvidia's AI smart-cities platform.

In response to the rivalry posed by Huawei, Nvidia CEO revealed in a recent interview with Reuters that the company is providing customers with samples of its two latest AI chips tailored specifically for the Chinese market.

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