Nvidia CEO’s low-key China visit seen as a goodwill gesture towards key market as US chip firm grapples with sanction issues

Nvidia CEO’s low-key China visit seen as a goodwill gesture towards key market as US chip firm grapples with sanction issues

Nvidia CEO’s low-key China visit seen as a goodwill gesture towards key market as US chip firm grapples with sanction issues

Nvidia Corp CEO Jensen Huang’s first trip to mainland China in four years has been a goodwill gesture to the chip designer’s staff and clients in the country, which remains a key market despite tough US restrictions, analysts say.

While Nvidia did not release details of Huang’s itinerary, a person familiar with the situation who asked not to be identified, said the firm invited several key distributors to its Beijing office for a get-together attended by Huang. A second person, who also requested anonymity, said Huang did not have any private meetings with Chinese officials.

“Following four years of disruption from the pandemic, Jensen is resuming his annual tradition of celebrating the Chinese New Year with our local employees,” said an Nvidia spokesperson, without elaborating.

Xinbang, a Chinese online media outlet that covers the semiconductor industry, reported that Huang visited Nvidia’s Beijing office on January 15, Shanghai on January 17 and Shenzhen on January 19, to attend annual meetings with local employees.

There have been no media reports of Huang meeting with Chinese clients or government officials during the trip, in contrast with recent visits by other high-profile US executives, such as Tesla founder Elon Musk and Apple CEO Tim Cook.

Nvidia chief visits China for first time in 4 years amid mainland market headwinds

Video clips of Huang meeting Chinese staff went viral on the mainland’s internet in recent days. In one clip, Huang, 60, was dressed in a red-and-green flowered vest, dancing on stage with other performers.

In another video, Huang drew a lucky number from a lottery box and called out the winner’s name as “Hua Wei”, which sounds similar to Chinese telecommunications giant Huawei Technologies, currently under tough US trade sanctions.

Huang’s visit comes as Nvidia is caught between US-China geopolitical hostilities. On the one hand, the mainland remains the most important market in Asia for Nvidia, contributing 20 to 25 per cent of revenue in the past several quarters.

On the other hand, the US government tightened chip export restrictions to China last October, blocking the mainland’s access to graphics processing units (GPUs) that Nvidia had specifically designed for Chinese clients in response to earlier curbs.

Yuyuantantian, a Chinese social media account run by state television, said in an opinion piece on Tuesday that Huang’s visit “reflected his concern about the possibility of losing the China market”.

“China’s artificial intelligence (AI) sector is growing rapidly and is leading the world along with the US … Nvidia knows what’s at stake. Loss of the China market and Chinese customer data would mean a double hit for Nvidia,” it added.

Analysts said Huang will have a tough job in the short-run to shore up business amid widening tensions between Washington and Beijing.

“Huang is trying to make a goodwill gesture to the important China market, although he doesn’t want to draw too much attention amid the current political environment,” said Arisa Liu, a semiconductor research director at the Taiwan Institute of Economic Research.

Su Lian Jye, a chief analyst with research company Omdia, said while Huang’s trip was a friendly gesture, it is unlikely to solve Nvidia problems in the Chinese market.

As China pushes ahead with its AI development, Nvidia GPUs have seen high levels of demand from cloud services clients such as Baidu, Tencent Holdings, Alibaba Group Holding and ByteDance. Alibaba owns the South China Morning Post.

However, under an October update to US trade sanctions, Nvidia cannot ship its leading A800 and H800 chips to China-based customers. As such, the US chip giant has developed three new data centre GPUs – the H20, L20 and L2. Nevertheless, US Commerce Secretary Gina Raimondo has warned that Washington will take a dim view of any workaround solutions targeted at the mainland.

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