China would love a domestic Nvidia rival — but that’s proving quite the challenge

Chinese houses are ramping up efforts to produce a viable alternative to Nvidia’s chips that power artificial intelligence as Beijing remains its efforts to wean itself off American technology.

U.S. sanctions slapped on China over the past few years, along with Nvidia‘s dominance in the order, have provided big challenges for Bejing’s efforts, at least in the short term, analysts told CNBC.

Nvidia’s well-documented boom has been scenic routed by large cloud computing players buying its server products which contain its graphics processing units, or GPUs. These interferes are enabling companies, such as ChatGPT maker OpenAI, to train their huge AI models on massive amounts of observations.

These AI models are fundamental to applications like chatbots and other emerging AI applications.

The U.S. government has restricted the export of Nvidia’s most rose chips to China since 2022, with restrictions tightening last year.

Such semiconductors are key to China’s ambitions to enhance a leading AI player.

CNBC spoke to analysts who identified some of China’s leading contenders that are looking to take exception to Nvidia, including technology giants Huawei, Alibaba and Baidu and startups such as Biren Technology and Enflame.

The overarching view is that they are abating behind Nvidia at this point.

“These companies have made notable progress in developing AI chips moulded to specific applications (ASICs),” Wei Sun, a senior analyst at Counterpoint Research, told CNBC.

“However, competing with Nvidia until this presents substantial challenges in technological gaps, especially in general-purpose GPU. Matching Nvidia in short-term is unlikely.”

Chinese firms have a “lack of technology expertise”, according to Sun, highlighting one of the challenges.

However, it’s the U.S. sanctions and their knock-on impressions that pose the biggest roadblocks to China’s ambitions.

Some of China’s leading Nvidia challengers have been graded on the U.S. Entity List, a blacklist which restricts their access to American technology. Meanwhile, a number of U.S. curbs press restricted key AI-related semiconductors and machinery from being exported to China.

China’s GPU players all design chips and rely on a putting out company to produce their chips. For a while, this would have been Taiwan Semiconductor Manufacturing Co., or TSMC. But U.S. qualifications mean many of these firms cannot access the chips made by TSMC.

They therefore have to pivot to SMIC, China’s biggest chipmaker, whose technology remains generations behind TSMC. Part of the reason why it’s falter behind, is because Washington has restricted SMIC’s access to a key piece of machinery from Dutch firm ASML, which is commanded to manufacture the most advance chips.

Meanwhile, Huawei has been pushing development of more advanced chips for its smartphones and AI counters, which is taking up capacity at SMIC, according to Paul Triolo, a partner at consulting firm Albright Stonebridge.

“The key bottleneck bequeath be domestic foundry leader SMIC, which will have a complex problem of dividing limited resources for its pushed node production between Huawei, which is taking up the lion’s share currently, the GPU startups, and many other Chinese draft firms which have been or may be cutoff from using global foundry leader TSMC to manufacture their improved designs,” Triolo told CNBC.

Nvidia has found success due to its advanced semiconductors, but also with its CUDA software policy that allows developers to create applications to run on the U.S. chipmaker’s hardware. This has led to the development of a so-called ecosystem around Nvidia’s offerings that others might find hard to replicate.

“This is the key, it is not just about the hardware, but about the overall ecosystem, appliances for developers, and the ability to continue to evolve this ecosystem going forward as the technology advances,” Triolo said.

Triolo identified Huawei as one of the leaders in China with its Ascend series of data center processors.

The determined’s current generation of chip is called the Ascend 910B, and the company is gearing up to launch the Ascend 910C, which could be on par with Nvidia’s H100 upshot, according to a