Chinese firms keep buying Nvidia chips under gov’t pressure: sources

Chinese tech firms, including Alibaba and ByteDance, remain keen to buy Nvidia’s AI chips despite Beijing’s efforts to discourage such purchases, according to sources familiar with procurement discussions.

The companies are seeking confirmation that their orders for Nvidia’s H20 model, which the US allowed Nvidia to resume selling in China in July, are being processed.

They are also closely monitoring Nvidia’s plans for a more powerful chip, tentatively named the B30A and based on the Blackwell architecture.

The B30A, if approved for sale by US regulators, is expected to cost about twice as much as the H20, which currently sells for US$10,000 to US$12,000.

Demand for Nvidia chips remains strong in China due to constrained supplies from domestic rivals such as Huawei and Cambricon, sources said.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Performance gaps keep Chinese firms dependent on foreign chips despite massive domestic investment

The continued demand for Nvidia chips reveals a persistent technology gap that Chinese companies haven’t bridged despite significant domestic investment.

Engineering sources at Chinese tech firms confirm that Nvidia’s chips still outperform domestic alternatives from companies like Huawei and Cambricon 1. Even Cambricon’s flagship Siyuan 590 chip delivers only 80% of Nvidia’s older A100 performance 2.

This performance gap becomes clearer when comparing market scales. While Cambricon reported explosive 4,300% revenue growth to $402.7 million in the first half of the year, Nvidia generated $46.7 billion in the same period 3.

The math shows why Chinese companies remain willing to navigate government pressure and pay premium prices for H20 chips at $10,000-$12,000 each, and are excited about the upcoming B30A at double the cost but promising six times more power 1.

Constrained supplies from domestic rivals like Huawei and Cambricon further drive this demand, creating a gap between political objectives and business realities that Chinese tech companies must navigate 1.

2️⃣ Revenue-sharing deals represent a new approach to tech competition management

The arrangement requiring Nvidia to give the US government 15% of its H20 chip revenue from China signals a shift from outright bans to managed competition 1.

This model allows the US to maintain some control over sensitive technology transfers while preserving commercial relationships worth potentially $50 billion to Nvidia in the Chinese market 1.