Blackwell GPU's exclusion from high-level trade talks highlights deepening AI ecosystem rift between nations
This is devastating news for Nvidia and many of its chip-manufacturing contemporaries. China is a massive market for hardware and AI development, but it's certainly not proven to be the most willing of markets.
Chinese authorities have spent months pushing back on the on-again, off-again availability of Nvidia hardware by encouraging its domestic companies to use domestic chip suppliers where possible. It mandates that Chinese companies use at least 50% domestically produced hardware and, more recently, has claimed that new packaging and assembly techniques can close the performance gap between Nvidia and its local producers.
Chinese chip firms have responded with gusto, too, announcing enormous plans to manufacture several times the chips they managed in 2025, as soon as next year. It's not clear if those plans will be physically possible in such a short time frame, but they're shooting for the moon nonetheless.
But even if the companies can fabricate these chips, there's no guarantee they'll be used, despite the double-ended carrot-and-stick approach of both the U.S. and Chinese authorities.
China has made major leaps in its AI hardware development over the past few years, particularly in the past year, as it's sought to build more reliable access to powerful AI hardware, while the U.S. turned the tap on and off at the whim of its mercurial commander-in-chief. These conditions have led Huawei to make tremendous advances and to design high-power systems that scale well, at the expense of efficiency.
But that's mainly in the realm of inference, which is the day-to-day running of an AI algorithm after it has been fully trained. Nvidia's GPU versatility is particularly well-suited for AI training, and it has no real rival.
There have been some semi-hyperbolic claims of a new Chinese chip design that leverages 3D hybrid bonding techniques, and is claimed to deliver performance comparable to 4nm Nvidia silicon in training workloads. Given the restrictions in place for China's access to EUV machines from ASML, it's an interesting area of expansion.
Nvidia wants China's market share to secure the future of CUDA in the region
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/the-senates-new-safe-bill-is-set-to-curb-access-to-advanced-chips-to-china-but-that-wont-slow-down-the-ai-war-training-workloads-still-heavily-rely-on-nvidia-while-alternatives-remain-inefficient#main
- https://www.tomshardware.com
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Informational only. No financial advice. Do your own research.