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Nvidia has been pushed into selling artificial intelligence chips in China at heavy discounts due to stiff competition from local players, specifically Huawei.

NVIDIA Corporation (NASDAQ:NVDA) had launched three AI chips tailor made for China last year, amid U.S. sanctions that prevented the firm from selling its most advanced AI chips in the country. 

Among the three, the H20, which is the most powerful, was seeing subdued demand in China, and in some cases, was being sold at an over 10% discount to a similar offering from Huawei- the Ascend 910B. 

The Ascend 910B was also seeing substantially more orders than the H20 from state-backed enterprises, citing limited government data. This came following a mandate from Beijing for state enterprises to use China-made silicon.

The 910B is the most advanced Chinese AI chip, and has shot up in popularity in the country following U.S. sanctions that attempted to block China’s access to the latest AI advancements. 

Its popularity in China presents more headwinds for Nvidia’s business in the country. The chipmaker has struggled to maintain its foothold in Chinese markets following the U.S. sanctions.

During its first quarter earnings this week, the company warned that China was becoming an increasingly competitive market, and that the firm’s data center revenue in China fell “significantly.” 

Steep discounts on the H20 also present more margin pressure for Nvidia.

Editor：Vicky

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