It's rolled up again!
A few days ago, the big model price war started. Today, news came that AI chips also started a price war. According to Reuters, Nvidia lowered the price of H20 AI chips for the Chinese market.
The source said that in some cases, the price of H20 chip is more than 10% lower than Huawei Ascend 910B. Chinese server dealers are selling H20 chips at a price of about 100000 yuan per group, and servers equipped with eight groups of chips are selling at a price between 1.1 million yuan and 1.3 million yuan per set.
Some market participants pointed out that Huawei only started to compete with Nvidia last year. The source said that Huawei will significantly increase the shipment of its Ascend 910B chip this year, and the chip outperforms H20 in some key indicators.
Robert Arnault, chairman of Research Associates, a well-known quantitative investment company in the United States, said on the 23rd local time that Nvidia's success in the market was based on the idea that it would continue to dominate the semiconductor industry in the future. But other chip giants should be involved. At present, Nvidia's valuation is indeed on the high side.
Nvidia's China Strategy
Due to previous US sanctions that prevented Nvidia's most advanced semiconductors from being exported to China, Nvidia launched three chips tailored for the Chinese market at the end of last year to circumvent relevant export policies. Among these chips, H20 attracts the most attention because it is the most powerful product sold in China. However, according to Reuters, three supply chain people said that the chip was in sufficient supply in the market, indicating weak demand. In some cases, the price of H20 chip is more than 10% lower than Huawei Ascend 910B (the most powerful AI chip of Chinese companies).
Klaette Kress, the chief financial officer of Nvidia, said earlier: "Compared with that before the implementation of the new export control restrictions in October, our data center revenue in China has declined significantly. We expect that competition in the Chinese market will remain very fierce in the future."
In the past six months, only five countries or national affiliated buyers expressed interest in purchasing H20 chips, while the number of Huawei 910B chip buyers reached a dozen in the same period. According to sources, some Chinese technology giants have placed orders, and Alibaba has ordered more than 30000 H20 chips. But Ali did not make a public response to this.
At present, the price of H20 server single card sold by server dealers in China is about 100000 yuan, and the price of eight card server single card is between 1.1 million yuan and 1.3 million yuan. In contrast, the price of Huawei 910B single card sold by distributors exceeds 120000 yuan, while the price of eight card servers is 1.3 million yuan to 1.5 million yuan. Industry insiders say that the price of H20 and Huawei 910B will fluctuate according to the size of the order.
Dylan Patel, founder of research institute SemiAnalysis, said that nearly 1 million H20 chips will be shipped to China in the second half of 2024, and Nvidia must compete with Huawei in price. Due to the larger memory capacity, the production cost of H20 is higher than that of H100. However, the price of H20 is only half of that of H100.
Three variables of Nvidia
At present, Nvidia has three variables: valuation, competitors and business in China.
By the end of Thursday's closing, Nvidia had risen 9.32%, its share price had steadily reached the 1000 dollar mark, and its total market value had reached 2.55 trillion dollars. However, its valuation level is not low. The company's price to earnings ratio (TTM) has reached nearly 60 times, the price to book ratio has also reached 52 times, and the market to sales ratio has also reached 40 times. In any case, it cannot be said that the valuation is at a low level. Moreover, from the perspective of horizontal comparison, the total market value of Nvidia exceeds the total market value of all listed companies in Germany. According to the data, as of Wednesday, the total market value of the first listed companies in Germany was about $2.51 trillion.
In addition, although Nvidia is now absolutely dominant, it is also facing many competitors. Previously, Nvidia identified Huawei as the largest competitor in many categories such as artificial intelligence chips for the first time in the documents submitted to the Securities and Exchange Commission of the United States. Other competitors mentioned by Nvidia include Intel, AMD, Broadcom and Qualcomm. In addition, Nvidia also listed many important cloud computing companies, such as Amazon and Microsoft. And just yesterday, Nvidia's newly rising competitor Groq revealed that the company has expressed its hope to raise about 300 million dollars to investors. One of them and a third said that Groq had hired Morgan Stanley to help raise funds. Groq's total amount of financing will double as a result of this round of financing, which will be closer to the start-up competitors such as Cerebras.
Then there is China business. According to the report of CCID, a Chinese market research company, China's share in the global AI industry is expected to exceed 30% by 2035. But on the one hand, Nvidia's most powerful chips are prohibited from being sold to China, and on the other hand, there are more excellent chips in China than those provided by Nvidia. Analysts believe that the above price dispute highlights the challenges faced by NVIDIA's business in China under the circumstances of sanctions imposed on the export of artificial intelligence chips by the United States and intensified competition. The Chinese market, which contributed 17% of its revenue, cast a shadow on the company in the 2024 fiscal year.
Hebe Chen, an IG market analyst, said: "Nvidia is taking a delicate path, trying to find a balance between maintaining the Chinese market and dealing with the tension in the United States. In the long run, Nvidia must also be preparing for the most adverse situation."
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