NVIDIA faces a cooling in China: Chinese tech giants accelerate self-developed chip replacements

This wave of actions is quite interesting—NVIDIA’s RTX6000D chip, launched specifically to comply with U.S. export bans, has received lukewarm responses from major Chinese manufacturers.

According to Reuters reports, the restricted RTX5090, although banned, can still be purchased on gray markets at less than half the price of the RTX6000D (around $7,000), and it offers even better performance. This creates an awkward situation: NVIDIA created a “compliance alternative,” but no one wants it.

Even more problematic is that major companies like Alibaba, Tencent, and ByteDance are waiting for NVIDIA’s H20 chip (the most powerful AI chip approved for sale in China) to resume supply. H20 was re-approved in July last year but has yet to start shipping. Additionally, the more powerful B30A chip is still under review in Washington, and everyone is watching to see if it will pass.

Emergence of Local Chips

What’s more concerning is that Chinese tech companies are beginning to shed their “exclusive dependence” on NVIDIA. According to The Information:

• Alibaba has already used self-developed chips to train AI models and started deploying small models earlier this year.
• Baidu is testing its Kunlun P800 processor to train a new version of the Ernie AI model.

Several Alibaba chip employees revealed that its performance now rivals NVIDIA’s H20, indicating rapid progress in China’s self-developed chip industry.

Although most companies still rely on NVIDIA for their high-end systems, Beijing has already announced that local companies should reduce dependence on foreign chips and prioritize domestically produced ones whenever possible.

Regulatory Pressures

NVIDIA’s situation is becoming more challenging. China’s State Administration for Market Regulation has accused it of violating antitrust laws (though specifics haven’t been disclosed, investigations are ongoing). NVIDIA responded that it complies fully with the law and will cooperate with investigations. This issue has been ongoing since December last year and is widely viewed as a countermeasure against the U.S. chip export bans.

CEO Jensen Huang recently mentioned that discussions with the White House about pushing low-end chips into China “require time.” There are also reports that NVIDIA reached an agreement with Trump: selling H20 chips in China to generate 15% of revenue in exchange for export approval.

Implication: NVIDIA’s “moat” in China is shrinking. Chinese tech companies are voting with their feet, and the path of self-developed chips is accelerating rapidly.