US chip controls the grace for China’s rivals as Huawei: Analysts

As the United States tightens NVIDIA sales in China, growing in the country of internal artificial intelligence such as Huawei is beneficial, say semiconductor analysts.

Trading department said last week The fact that the H20 graphics units for processing NVIDIA – designed to meet previous American restrictions – will now require export licenses as well as additional chips from AmdS Nvidia says she has already stopped exporting graphics processors, leading to a three -month fee of approximately $ 5.5 billion.

But the loss of American AI Darling can be a profit for local AI Chip players in China, as Beijing continues to seek its own NVIDIA alternative, semiconductor analysts told CNBC.

“There are several local Chinese companies that produce chips to compete with NVIDIA,” says Brady Wang, an associate director of Counterpoint Research.

Examples of these local AI Chipmakers manufacturers include Tech Powerhouse Huawei and partially state and publicly listed Cambricon Technologies, which design GPU.

Cambricon’s shares are over 10% in the last five trade days amid NVIDIA news. The action is over 400% in the last 12 months.

These local competitors already have a bigger impetus and opportunity to grow and improve their decisions, said Wang, adding that it expects the search for their graphic processors to increase.

Analysts cited Huawei as a clear leader in China’s competition to find a competitor of NVIDIA. Thehe US-Blacklisted The company works independently “Ascend 910“The GPU series, the most recent of which is according to the messages ASCEND 910CS

“With the NVIDIA H20 and other advanced graphics processors, internal alternatives such as the Huawei ASCEND series are gaining grip,” says Doug O’laflin, an industrial analyst in the independent semiconductor company Semianalysis.

A Recent report Semianalysis states that although Huawei remains a “generation behind the chips”, the company “makes waves” with the hardware that uses them.

“Although there are still gaps in the maturity of the software and the overall readiness for the ecosystem, the hardware performance closes quickly,” O’Lflin added.

However, experts note that export control has also prevented China’s ability to produce advanced graphic processors on the same scale that NVIDIA can through its partner Taiwanese company for semiconductor productionThe largest chip manufacturer in the world.

“Huawei has manifested itself as a competitive chip chip designer … But they are struggling to find enough supplies from their foundry,” says Felix Lee, an analyst aimed at semiconductor shares for Morningstar.

As TSMC chip equipment includes US technology, the company has complied with US trade restrictions on Huawei and the delivery of advanced chips to China. Which leave Chinese companies increasingly rely on local founders as International Corporation for the production of semiconductsS

However, SMIC is under its own export control which Prevents it from having access Some of the most modern chip equipment in the world.

Given these conditions, Lee said, he remains “very skeptical” that Chinese foundry chip will be able to provide enough alternatives to the H20 GPU to meet the search for Chinese technology companies soon.

Last month the information reported The fact that Chinese companies have placed orders for at least $ 16 billion in the H20 server chips in the first three months of the year. Nvidia did not immediately respond to CNBC’s request for comment.

According to Wang on Counterpoint, it is not clear how long the existing shares of different companies will continue, but they provide Chinese chipmators with more time to increase GPU production.

In the short term, “I believe that the impact of controls is limited … In the middle and the longer term, it will depend on the progress of this local development of the graphic processor,” he said.

Meanwhile, according to the Huawei ASCEND CHIP report, Huawei shows how China’s export control has failed to stop companies like Huawei to have access to critical foreign instruments and subcomponents needed for advanced graphics.

“While the Ascend chip can be made in SMIC, this is a global chip that has HBM from Korea, primary production of TSMC waffles and has been manufactured by 10 billion waffle production equipment from the US, Netherlands and Japan,” the report said.

Semianalysis added that SMIC production capacity has the potential to grow massively, given the constant access to foreign instruments and the lack of effective sanctions and application.

TSMC is According to messages Under an investigation by the US Department of Commerce after Chip, which made Sophgo -based in China, coinciding with the one found in the Huawei Ascend 910B artificial intelligence processor.

Considering reports on export control and Huawei’s GPU progress control, a number of semiconductor experts have doubted that recent NVIDIA restrictions will achieve their goal.

“US control over graphics and semiconductor equipment has damaged mainly US companies, including NVIDIA, while having a marginal impact on Chinese companies to develop border AI models,” says Paul Triolo, a partner and China’s senior Vice President in DGA Group.

Instead, export control has encouraged the Chinese semiconductor industry to become more innovative while designing US technology, he added.

Next month, NVIDIA may encounter additional restrictions on what it can take out “Under”AI diffusion rules“First proposed by the Biden administration.