The Chinese government is reportedly considering approving purchases of Nvidia's new AI chip, the RTX Pro 5500, by major domestic tech companies such as ByteDance and Alibaba.
According to a report from the U.S. tech outlet The Information on September 27, the Ministry of Industry and Information Technology has instructed some companies to report their plans for purchasing the high-performance GPU RTX Pro 5500, including intended usage. However, specific details regarding the timing of any approvals remain unclear.
The RTX Pro 5500 is primarily used for graphics tasks and simulations but can also be utilized for AI-related work. The retail price in China is expected to reach up to 90,000 yuan (approximately $12,500). Industry experts believe that, due to its lower performance compared to Nvidia's cutting-edge AI-specific GB300 series and its production using older technology, it may be excluded from U.S. export restrictions to China.
ByteDance is reportedly reviewing an order for about 1 million chips, while Nvidia aims to supply 500,000 units quarterly to China starting in December, according to The Information.
Nvidia has seen its market presence in China diminish due to U.S. export restrictions and China's semiconductor self-sufficiency policies. Although the U.S. government allowed the export of Nvidia's high-performance AI accelerator, the H200, to China last December, the Chinese government has been cautious about actual purchases, citing the need to protect its domestic semiconductor industry.
The backdrop for the Chinese government's potential approval of Nvidia chip purchases includes the rapid growth of the AI industry in China and a corresponding shortage of high-performance semiconductors.
Chinese companies are making significant investments in AI model development and data center expansion, but they are struggling to secure enough high-performance AI chips. While the performance of domestically produced semiconductors is improving rapidly, production capacity is not keeping pace with demand.
Eric Xu, rotating chairman of Huawei, stated at the Huawei Connect event on September 17 that the company is not considering exporting its chips, explaining that current production capacity makes it difficult to meet domestic AI demand.
According to market research firm TrendForce, the combined share of chips developed by Chinese semiconductor companies and big tech firms like Huawei and Cambrian is expected to account for about 80% of China's AI server semiconductor market this year. In contrast, the market share of foreign companies like Nvidia and AMD is projected to drop from 34% last year to 21% this year.
As the market share of Chinese AI semiconductors rises rapidly, an increase in Nvidia's product sales in China could pose challenges for local semiconductor manufacturers.
On September 28, shares of major semiconductor companies in China, including Cambrian Technology (-6.26%), SMIC (-2.85%), CXMT (-4.2%), and Huahong Semiconductor (-6.37%), fell sharply. This decline is interpreted as a reflection of concerns that increased availability of Nvidia products in the Chinese market could reduce demand for domestic chips.
Conversely, if the Chinese government approves purchases from Nvidia, the company may have an opportunity to regain some of its lost market presence in China. However, uncertainties remain regarding the actual sales volume and timing due to ongoing U.S. export regulations and the need for final approval from the Chinese government.
* This article has been translated by AI.
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