Xiang Ligang
Yesterday, when the Global Times wrote an editorial, they interviewed me, and I believe NVIDIA will not be able to hold onto the Chinese market.
Despite NVIDIA’s soaring performance fueled by the development of artificial intelligence, its current position is unsustainable.
Starting from graphics processing, GPUs primarily focus on computing acceleration. The chip architecture itself is quite simple. Even in the era of personal computers, Intel disdainfully refrained from producing such chips, which gave NVIDIA an opportunity. NVIDIA’s development relied mainly on two factors: speculation in Bitcoin and the massive demand for mining machines. These operations didn’t require complex functionalities, just simple repetitive calculations, making GPUs with computing acceleration capabilities suitable.
Another opportunity came with pre-training for artificial intelligence, which essentially involves a lot of repetitive calculations, suitable for GPUs with computing acceleration capabilities. There are few companies producing GPU products in the market not because it’s exceedingly difficult but because the market isn’t large. Fueled by the hype around artificial intelligence, NVIDIA’s revenue has grown tremendously, increasing by 126%. NVIDIA’s revenue in 2023 was only $60.9 billion, slightly more than half of the projected $110 billion revenue for 2023.
Today, seeing such market opportunities, Intel and AMD have also started entering this market.
NVIDIA has built its own ecosystem using CUDA, which is currently its strongest competitive advantage. However, this advantage is being targeted by the U.S. government.
Without U.S. sanctions, a market worth hundreds of billions of dollars would not be easily entered by ordinary enterprises because the market isn’t particularly large, yet the investment required is substantial. There are traditional dominant players in this market, and NVIDIA basically has no competitors in this market not because of its exceptionally powerful technology, but because other companies find it not worthwhile, with substantial risks.
The requirements for GPU technology aren’t particularly high. Designing and producing them isn’t difficult, and a 7nm manufacturing process is sufficient. When there’s high demand, NVIDIA’s revenue increases.
I believe the United States will definitely engage in a tech war. A tech war always needs a point of entry to sanction China. The U.S. government is hesitant to act against its own companies because the influence of Wall Street is too strong. NVIDIA is also an American company, but its founder, Huang Renxun, is Taiwanese. It’s logical not to allow him to export products to China, especially considering that artificial intelligence is the future focus of high technology.
When NVIDIA releases a product, the U.S. government bans it. When NVIDIA releases another product, the U.S. government bans it again. When NVIDIA releases yet another product, the U.S. government still bans it.
This situation is the U.S. government undermining NVIDIA’s ecosystem and helping Chinese companies establish their own.
There isn’t much difference in the GPU chip itself. China has more than five companies capable of reaching NVIDIA’s level of computation. Today, in China, chips can be directly produced, but what’s lacking is the ecosystem. If NVIDIA releases a chip, the U.S. government bans one chip. Today, apart from universities and research institutions clamoring, all enterprises clearly see that relying solely on NVIDIA’s chips is too risky. Who knows when problems might arise? Do their own AI centers need expansion?
They will definitely seek alternative products, and finding alternatives in China isn’t difficult. Therefore, the neutered version of NVIDIA’s chips is being cold-shouldered in China.
It’s currently a transitional period. Establishing an ecosystem like CUDA isn’t difficult; what’s challenging is garnering widespread support. Despite NVIDIA’s GPUs being widely sold in China, people find it convenient to use, but support is lacking. Now, for every NVIDIA GPU product banned, Chinese enterprises will turn to domestic products, and soon, a situation where everyone supports them will emerge.
NVIDIA’s market capitalization of $2 trillion supported by a revenue of $600 billion, I believe, will collapse soon. Those who join the hype and buy NVIDIA today will inevitably lose everything in the end.