Nvidia’s newest artificial intelligence chip designed specifically for the Chinese market has seen lower-than-expected demand, with tech giants such as Alibaba and ByteDance preferring not to place orders for them, people with knowledge of procurement discussions told Reuters.
The chip, RTX6000D, is designed mainly for tasks related to AI inference — currently one of the most coveted processes in AI, which allows large language models to use their existing data to make predictions or decisions based on new data.
But RTX6000D is being seen as expensive for what it does, sources told Reuters. They also said its performance lags the RTX5090 – a chip banned by the US for use in China but which is still readily available through grey market channels at less than half the RTX6000D’s price of around 50,000 yuan ($7,000).
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Nvidia began shipping the RTX6000D to China this week. Weak demand for the chip contrasts with optimistic projections from sell-side analysts.
JPMorgan said in a report last month that it expected some 1.5 million RTX6000Ds to be produced in the second half of this year. Morgan Stanley predicted in July that Nvidia would have 2 million RTX6000Ds in its pipeline.
Meanwhile, Chinese tech giants, including Alibaba, Tencent and ByteDance, are also waiting for clarity on whether they will receive Nvidia’s H20 chip — a more powerful processor also coveted for running inference.
The tech firms are waiting for their H20 orders to be processed after Washington recently gave Nvidia permission to start shipping it to China again after a brief ban. While the ban was lifted in July, H20 shipments to China are yet to restart.
Sources also told Reuters the firms are also hoping that Nvidia’s B30A – a much more powerful chip than the H20 – will be approved by Washington. The B30A is expected to deliver up to six times more performance than the H20, while costing only twice as much.
Using homemade chips
The extent to which China has access to cutting-edge AI chips is one of the biggest flashpoints in US-Sino trade tensions.
The RTX6000D, H20 and B30A are all downgraded versions of processors that Nvidia sells outside China. They are designed to comply with export restrictions put in place by Washington, which wants to rein in Chinese AI development.
The RTX6000D, for instance, is based on Nvidia’s latest Blackwell architecture with conventional GDDR memory and memory bandwidth of 1,398 gigabytes per second, just below the 1.4 terabyte threshold set under restrictions laid out in April.
It was developed in part to fill a void left by the H20, which was banned from sale in April before that decision was reversed.
The H20, which is priced between $10,000 and $12,000, uses older Hopper architecture, but has greater memory bandwidth of 4 terabytes per second.
By lifting the ban on H20, the US has indicated a retreat from its previous position of more severe export restrictions.
US Secretary of Commerce Howard Lutnick has described that change as an effort to keep Chinese firms “addicted” to American technology.
But Beijing has become increasingly keen for Chinese firms to switch to domestic chips, even if Nvidia’s products are preferred by many companies. That push has seen Chinese firms turn to more homemade chips, despite higher costs and lower performance.
Last week, tech news publications The Information reported that Alibaba and Baidu had started using internally designed chips to train their AI models. Both firms are partly replacing chips made by Nvidia in the process.
Increasing challenges in China
Alibaba has been using its own chips for smaller AI models since early this year, The Information report said, adding that Baidu is experimenting with training new versions of its Ernie AI model using its Kunlun P800 chip.
The move would mark a significant shift in China’s tech and AI landscape — where companies largely rely on Nvidia’s powerful processors for AI development.
Neither Alibaba nor Baidu has fully abandoned Nvidia, the report said, with both companies using Nvidia chips to develop their most cutting-edge models.
But, Alibaba’s AI chip is now good enough to compete with Nvidia’s H20, The Information said, citing three employees who have used the chip.
The development, along with lower-than-expected demand for the RTX6000D, point to mounting challenges for Nvidia in China — its once most critical market. Prior to tight US restrictions, Nvidia held a 95% share of China’s AI chip market. Its share is now down to just 50%, the chipmaker said in May.
On Monday, China accused Nvidia of violating China’s anti-monopoly law, casting more uncertainty on its business in the country. Beijing has said it will open further investigations into the chipmaker, without specifying the scope of those probes.
Chinese authorities have also summoned companies, including Tencent and ByteDance, over their purchases of the H20, asking them to explain their reasons and expressing concerns over information risks.
Shipments of the H20 have, meanwhile, not started for several reasons, including Nvidia’s need to sort out some issues related to a recent deal to give the US government a portion of its China sales.
Nvidia CEO Jensen Huang said last month that discussions with the White House to allow sales of more advanced chips like the B30A in China would take time.
In regard to the lower-than-expected sales of the RTX6000D, an Nvidia spokesperson said in a statement that the “market is competitive – we offer the best products we can.”
- Reuters, with additional editing and inputs from Vishakha Saxena
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