In A First For Huawei, Nvidia Acknowledges Huawei As Primary Competitor In Official Filing; Nvidia VS Huawei, Who Will Win The AI Game?

Nvidia has acknowledged Huawei as a principal competitor for the first time in an official filing submitted to the Securities and Exchange Commission on Wednesday.

The company, headquartered in Santa Clara, California, spotlit Huawei’s significant presence in various sectors, particularly in artificial intelligence (AI) chip manufacturing, GPUs, CPUs, and networking chips.

Nvidia also recognized Huawei’s efforts in cloud services, where it developed its own hardware and software to enhance AI computing capabilities.

In response to Huawei’s advancements, Nvidia cited the Ascend series of chips developed by the Chinese tech giant as a direct competitor to Nvidia’s AI chip lineup.

Notably, Huawei’s flagship product, the 910B chip, directly competes with Nvidia’s A100 chip, which debuted approximately three years ago. Analysts have valued China’s AI chip market at an estimated $7 billion.

Recent reports revealed that major Chinese entities like Baidu have turned to Huawei for chip orders, particularly in anticipation of tightened U.S. government regulations on exporting advanced AI chips to China.

Nvidia also identified other notable rivals, including Intel, Advanced Micro Devices (AMD), Broadcom, and Qualcomm, along with major cloud computing players like Amazon.com and Microsoft.

The Massive Stock Surge
Following Nvidia’s optimistic revenue forecast, with strong demand for AI technology continuing unabated, the company’s shares surged by 14% in early afternoon trading on Thursday, marking the largest single-day gain in Wall Street history.

The remarkable uptick came on the heels of the chipmaker’s quarterly report surpassing expectations, reigniting a surge driven by optimism surrounding artificial intelligence (AI) technologies.

Following the release of its January-quarter report, Nvidia’s stock skyrocketed by 16.4% to close at a record-high of $785.38, propelling the company’s market capitalization to $1.96 trillion, as demand for its specialized AI computing chips continued to outstrip already lofty analyst projections.

The results from the company injected fresh momentum into a global surge in technology stocks linked to AI, driving indices like the S&P 500, Europe’s STOXX 600, and Japan’s Nikkei share average to exceptional highs.

Traders engaged in a flurry of activity, exchanging $65 billion worth of Nvidia shares on Thursday, accounting for nearly a fifth of all trading in S&P 500 stocks.

Nvidia’s historic increase in market value surpassed any previous single-day gain on Wall Street, easily eclipsing Meta Platforms’ record $196 billion surge on February 2. The surge also dwarfed the entire market value of Coca-Cola, which stands at $265 billion.

With this surge, Nvidia became the U.S. stock market’s third-most valuable company, surpassing tech giants like Amazon.com and Alphabet after closely contending with them in recent weeks.

Microsoft and Apple retain their positions as the two most valuable companies on Wall Street.

Minting Money
In 2024 alone, Nvidia’s stock has surged by 58%, contributing significantly to the overall increase of the S&P 500, accentuating the key role Nvidia plays not only for its direct shareholders but also for owners of index funds prevalent in retirement savings accounts.

Russ Mould, investment director at AJ Bell, likened Nvidia’s position in the current tech revolution to those who provided tools during the mid-1800s gold rush, emphasizing its integral role in facilitating technological advancements.

The soaring demand for Nvidia’s chips, driven by companies eager to enhance their AI capabilities, led the company to forecast a staggering 233% growth in current-quarter revenue, surpassing market expectations.

Other chipmakers with exposure to AI, such as Advanced Micro Devices and Broadcom, also saw significant rallies. The Philadelphia chip index surged to a record high, marking its most substantial single-day gain since May 2023.

Nvidia’s dominance in the high-end AI chip market, accounting for about 80% of it, was underscored by its fourth-quarter revenue, which jumped more than threefold from the previous year to $22.10 billion.

Despite these impressive figures, concerns lingered regarding U.S. restrictions on chip sales to China, potentially impacting Nvidia’s revenue growth. Sales in China decreased to about 9% of Nvidia’s fourth-quarter sales, down from 22% in the prior quarter.

Although analysts’ financial estimates for Nvidia have surged, the company’s forward earnings valuation has decreased. This adjustment comes even as its stock tripled in value the previous year, reflecting a reevaluation of expectations.

While many investors remain optimistic, some caution against the rapid pace of Nvidia’s gains, suggesting a potential slowdown in revenue growth.

Nvidia VS Huawei
As the demand for artificial intelligence (AI) applications continues its meteoric rise, a fierce battle for dominance unfolds in the chip sector between two global tech behemoths – Nvidia and Huawei.

Both companies are aggressively pursuing the lead in developing and manufacturing high-performance processors essential for fueling the next wave of AI-driven innovations.

The competition between Nvidia and Huawei is set to escalate further in the coming years, mirroring the escalating demand for AI technologies.

Investing heavily in research and development (R&D), both Nvidia and Huawei aim to push the boundaries of AI chip capabilities, striving to meet the evolving needs of future applications, and the outcome of this rivalry will significantly shape the trajectory of computing and the advancement of AI-powered solutions.

Acknowledging the formidable competition, Nvidia’s CEO, Jensen Huang, identifies Huawei as one of the prominent contenders in the quest to pioneer cutting-edge AI chips.

Alongside Intel and a growing array of semiconductor startups, Huawei poses a substantial challenge to Nvidia’s established dominance in the AI accelerator market.

Addressing reporters in Singapore, Huang stressed Huawei’s significant presence, particularly highlighting its impressive advancements in domestically-produced smartphone processors, solidifying its standing as a leading chip technology player.

Nvidia perceives Huawei as a formidable rival, accentuated by concerns over U.S. chipmakers’ struggles to establish independent supply chains from China in the forthcoming decade.

Since these vulnerabilities could carry profound implications, especially amidst escalating international tensions, given China’s substantial market share, representing a fifth of Nvidia’s sales, the rapid evolution of this $7 billion market outlines the strategic significance of this evolving competition.

Still, Nvidia, leveraging its expertise in graphics processing units (GPUs), stands at the forefront of the AI chip race; renowned for their prowess in handling intricate calculations and parallel processing, Nvidia’s GPUs underpin various AI applications, including self-driving vehicles, virtual reality (VR) systems, and machine learning (ML) algorithms.

Contrastingly, Huawei has made notable headway in developing its proprietary AI chips, branded as Ascend processors. While yet to be as widely adopted as Nvidia’s GPUs, Ascend processors gain recognition for their energy efficiency and seamless integration with Huawei’s bespoke hardware and software ecosystems.

Not To Be Put In A Corner
Amidst U.S. restrictions on Nvidia’s cutting-edge artificial chips sales to China, Huawei seized the opportunity to expand its market presence, reportedly securing a substantial AI chip order from Chinese tech giant Baidu – a deal valued at 9888.HK.

Renowned globally for its telecommunications and smartphone ventures, Huawei strategically forayed into developing its Ascend AI chip series over the past four years; positioned as a direct rival to Nvidia’s A100 chip, Huawei’s flagship product in this domain is the Ascend 910B.

In 2018, Huawei revealed the Ascend 910, officially launching it the following year as part of its holistic AI portfolio strategy; despite U.S. export constraints, Huawei touted the Ascend 910, crafted on a 7-nanometer process, as the world’s most potent AI processor.

The chip demonstrated exceptional performance, boasting 256 TeraFLOPS for half-precision floating-point (FP16) operations and 512 TeraOPS for integer precision calculations (INT8). Huawei emphasized the chip’s efficiency, surpassing its initial power consumption target.

However, Nvidia’s subsequent releases of the A100 and H100 chips in 2020 and 2022 solidified the company’s supremacy in the global AI chip market.

August witnessed the chairman of Chinese AI giant iFlytek lauding Huawei for developing a GPU comparable to Nvidia’s A100, hinting at collaboration on hardware development.

In the same month, Baidu met the demand for advanced AI chips by ordering 1,600 Huawei 910B chips for 200 servers; while analysts acknowledge that the 910B chips compete with Nvidia’s in raw computing power, there may be a slight performance lag.

Nonetheless, these chips present a sophisticated domestic alternative within China, positioning Huawei as a significant player in the dynamic AI chip technology landscape.

The Bright Future
With the growing AI chip market projected to reach $7 billion in China alone, Huawei’s aspirations to challenge the dominance of U.S.-based Nvidia have gained momentum.

Huawei’s CFO, Meng Wanzhou, reiterated the company’s commitment to becoming a leading provider of AI computing power, emphasizing its aim to offer the world a “second option.”

Although China’s AI firms currently rely on domestically produced chips, such as Huawei’s, which currently lag behind Nvidia’s performance, analysts foresee rapid advancements.

Supported by substantial investment from the Chinese government in AI and semiconductor development, Huawei could bridge the performance gap, emerging as a formidable global competitor in the AI chip market.

Amid U.S. caution regarding bolstering China’s tech capabilities, export restrictions on advanced chips pose challenges for Nvidia, expecting a significant drop in Chinese sales in the coming months.

The uncertainty lies in the recovery of these sales post-ban.

Adding complexity, Huawei’s surprise unveiling of a domestic smartphone processor, rivalling two-year-old chips from U.S. manufacturer Qualcomm, poses a challenge to American companies, and should China sustain its support for the local tech ecosystem, the incentive to shift business to American firms diminishes.

Who Else Could Challenge Nvidia’s Dominance?
Nvidia presently enjoys a formidable position in the GPU market, yet numerous factors loom on the horizon that could potentially erode its supremacy.

AMD
AMD stands as Nvidia’s primary competitor in the GPU market, offering compelling products at more affordable prices. With a steady increase in market share in recent years, AMD’s advancements in its RDNA architecture pose a notable threat to Nvidia.

Samsung Electronics
As a prominent chip manufacturer excelling in both CPUs and GPUs, Samsung is collaborating with AMD to craft next-generation GPUs, promising further disruption within the market landscape.

Microsoft
Under the helm of Bill Gates, Microsoft is forging its path by developing custom ARM-based GPUs tailored for its Surface devices and cloud infrastructure. These chips could potentially rival Nvidia’s offerings, particularly in segments like high-performance computing and edge computing.

Intel
The global leader in chip manufacturing is making significant strides into the GPU market with its discrete Arc graphics cards. Although Intel has encountered initial hurdles, the company’s substantial resources and expertise hint at a potential competitive breakthrough in the future.

Broadcom
As a diversified technology entity boasting a stellar track record in high-performance semiconductor development, Broadcom has signaled interest in broadening its product range to include GPUs. Should the company successfully penetrate this segment, it could significantly disrupt the market landscape.

Startups
A plethora of startups are on the rise, crafting innovative GPU technologies, including specialized AI accelerators and custom-designed chips optimized for specific applications.

These emerging players wield the potential to disrupt the status quo if their technologies prove superior to those of established industry giants.