Tech war: Nvidia founder calls China a ‘very important’ market as AI frenzy fuels huge demand for its chips

Nvidia’s founder and CEO Jensen Huang Jen-hsun called China a “very important” market for the technology industry, as demand for the US company’s specialised chips explodes amid a frenzy over artificial intelligence (AI).

Huang, 60, was quoted by the Financial Times as saying that the Biden administration’s export controls that bar the company from selling its most advanced chips to one of its biggest markets is like having “our hands tied behind our back”.

The US government ban on its most advanced graphic processing units (GPUs) has impacted about a quarter of Nvidia revenues, forcing the company to tailor-make alternative, lower-end versions for Chinese clients to comply with the export rules.

“If we are deprived of the Chinese market, we don’t have a contingency for that. There is no other China, there is only one China,” Huang was quoted by the newspaper as saying. He also said Chinese companies were starting to build their own chips to rival Nvidia’s market-leading processors used for gaming, graphics and AI applications.

Nvidia’s shares are poised to have their best day ever, with a 29 per cent surge in post-market trading after it raised its demand outlook for AI chips.

For now, China has still been buying Nvidia chips as there are few alternatives available. Tencent Cloud last month introduced new servers for large-scale model training, which are based on Nvidia’s less powerful H800 AI chip, the export-friendly version of its flagship H100. Tencent did not say how many H800 chips it purchased.

Huang was quoted as saying that China will “just build it themselves” if its companies cannot buy from US suppliers. “So the US has to be careful. China is a very important market for the technology industry,” he told the FT.