Nvidia Under Pressure in China: New Energy Efficiency Rules Threaten Sales | Computer hardware parts | Nvidia hardware | Types of cpu | Turtles AI
Nvidia Under Pressure in China: New Energy Efficiency Rules Threaten Sales
Chinese regulations impose tougher standards for data centers, jeopardizing Nvidia’s H20 chip and opening up room for local competition, with Huawei at the forefront
Isabella V27 March 2025
China’s new energy efficiency regulations threaten Nvidia’s sales in the local market, benefiting competitors like Huawei.
Key Points:
- China’s National Development and Reform Commission (NDRC) is promoting the use of energy-efficient chips in data centers.
- Nvidia’s H20 chip does not currently meet these new Chinese energy standards.
- Huawei emerges as a significant competitor with its Ascend 910C chip, offering competitive performance.
- Nvidia is evaluating technical changes to its products and engaging with Chinese authorities to address the new regulatory challenges.
Recent directives from China’s National Development and Reform Commission (NDRC) are imposing more stringent energy efficiency requirements for chips used in both newly built and expanded data centers. These measures could significantly impact Nvidia’s operations in the Chinese market, as their H20 chip, designed to comply with US export restrictions, does not currently meet the new Chinese energy standards.
China represents a significant portion of Nvidia’s revenue, with about 13% of total revenue, equivalent to $17.1 billion in fiscal 2025. The introduction and strict enforcement of new regulations could therefore compromise a significant portion of the US company’s sales in the Asian country.
In this context, Huawei is establishing itself as a significant competitor in the AI chip sector. Its Ascend 910C processor offers competitive performance, reaching about 60% of the capabilities of the Nvidia H100 in inference tasks. In addition, Huawei has improved the production of its advanced AI chips, increasing the yield rate to 40% from 20% the previous year, with plans to increase production to 100,000 units this year. To address these challenges, Nvidia is considering technical changes to its products to meet Chinese energy requirements. The company is engaged in dialogues with local authorities to find solutions that will allow it to maintain its presence in the Chinese market, despite increasing regulatory restrictions and domestic competition.
These dynamics highlight the complexity of the global technology market, where companies must navigate local regulations and geopolitical tensions, continuously adapting their strategies to maintain competitiveness.