Nvidia vs Huawei: Battle for AI Chips

Nvidia (NVDA) shares dipped just over 2% on Monday, 28 April, after reports emerged that Chinese tech giant Huawei is preparing to launch a new advanced AI chip. The new chip potentially challenges Nvidia’s reign as king of AI semiconductors at a time when Nvidia faces new export restrictions imposed by the Trump administration on sales to China. (Source: Yahoo Finance)

Nvidia Price Performance Chart

There has been a strong rebound off the lows in Nvidia stock but it remains well down from its record high set in January. 

GUPPY moving averages may be used to judge the trend. NVDA remains well above its 200-day moving average, suggesting a longer term uptrend but is below its 30-day moving average. Added to that, a bearish moving average crossover signal has just occurred with the 20-day SMA falling below the 50-day SMA.

*Past performance does not indicate future results 

Huawei’s new AI Chip 

China’s Huawei Technologies has announced plans to launch its most powerful artificial intelligence chip yet, the Ascend 910D this year, aiming to position it as a replacement for US chipmaker Nvidia. According to anonymous sources reported by the Wall Street Journal, Huawei is preparing to test its chip with tech companies in China by late May.

The new development builds on already strong momentum with Huawei expected to deliver over 800,000 Ascend 910B and 910C chips this year to customers including state-owned telecom companies and private AI developers like ByteDance, the parent company of TikTok.

Huawei’s progress in AI chips is clearly big news for investors, as shown by the drop in Nvidia shares. However, its technology remains largely unproven compared to Nvidia’s now well-established offerings. 

The Ascend 910D still needs to pass a series of performance tests, and Huawei faces significant hurdles in scaling production. Moreover, with Chinese chipmakers restricted from accessing key global markets and advanced manufacturing tools, it’s uncertain whether Huawei can meaningfully challenge Nvidia’s dominance outside of China, where its chip sales are effectively blocked.

Nvidia’s H20 Chip Export ban

Huawei’s new chip is reportedly designed to serve as an alternative to Nvidia’s H100 and the H20, which were recently banned from exporting to China without a license under new restrictions imposed by the Trump administration. The H20 is a massive earner for Nvidia, generating an estimated $12 to $15 billion in revenue in 2024. 

China is Nvidia’s fourth-largest market overall, and the company predicted the new export restrictions could cost it $5.5 billion in chip sales.

FAQ: Can You Invest in Huawei?

Despite a dominant position in smartphones and 5G chips, Huawei is still a privately held company entirely owned by its employees. As a result, it is not listed on any public stock exchange, and outside investors, including the general public, cannot buy shares in the company.

Conclusion

The battle between Nvidia and Huawei highlights the growing competition in the AI chip market, particularly as geopolitical tensions reshape the global tech landscape. While Huawei’s advancements are significant, Nvidia’s established dominance, proven technology, and global reach continue to set it apart, at least for now. Investors will be closely watching how these developments unfold and what they mean for Nvidia’s AI leadership.

*Past performance does not indicate future results