Can someone ELI5 this to me? Nvidia has the market cap of a medium-sized country precisely because apparently (?) no one else can make chips like them. Great tech, hard to manufacture, etc - Intel and AMD are nowhere to be seen. And I can imagine it's very tricky business!
China, admittedly full of smart and hard working people, then just wakes up one day an in a few years covers the entire gap, to within some small error?
How is this consistent? Either:
- The Chinese GPUs are not that good after all
- Nvidia doesn't have any magical secret sauce, and China could easily catch up
- Nvidia IP is real but Chinese people are so smart they can overcome decades of R&D advantage in just s few years
- It's all stolen IP
To be clear, my default guess isn't that it is stolen IP, rather I can't make sense of it. NVDA is valued near infinity, then China just turns around and produces their flagship product without too much sweat..?
rsynnott · 12m ago
> because apparently (?) no one else can make chips like them
No, that's not really why. It is because nobody else has their _ecosystem_; they have a lot of soft lock-in.
This isn’t just an nvidia thing. Why was Intel so dominant for decades? Largely not due to secret magic technology, but due to _ecosystem_. A PPC601 was substantially faster than a pentium, but of little use to you if your whole ecosystem was x86, say. Now nvidia’s ecosystem advantage isn’t as strong as Intel’s was, but it’s not nothing, either.
(Eventually, even Intel itself was unable to deal with this; Itanium failed miserably, largely due not to external competition but due to competition with the x86, though it did have other issues.)
BrawnyBadger53 · 12m ago
The article seems to only depict it being similar to the H20 in memory specs (and still a bit short). Regardless, Nvidia has their moat through cuda, not the hardware.
fearmerchant · 10m ago
China's corporate espionage might have surpassed France at the winners podium.
anothernewdude · 11m ago
Flagship? No, H20 was their cut down chip they were allowed to sell to China.
cedws · 1h ago
Apparently DeepSeek’s new model has been delayed due to issues with the Huawei chips they’re using. Maybe raw floating point performance of Chinese chips is competitive with NVIDIA, but clearly there’s still a lot of issues to iron out.
elp · 1h ago
I'm sure there are LOTS of issues that need to be addressed, but the demand for the chips are so high that the incentives are overwhelmingly in favor of this continuing. If the reported margins on the Nvidia chips are as high as the claims make it out to be (73+% ??) this will easily find a world wide market.
It was also frustratingly predictable from the moment the US started trying to limit the sales of the chips. America has slowed the speed of Chinese AI development by a tiny number of years, if that, in return for losing total domination of the GPU market.
smokefoot · 1h ago
I mean, I don’t know how long the NVIDIA moats can hold. With this much money at stake, others will challenge their dominance especially in a market as diverse and fragmented as advanced semiconductors.
That’s not to say I’m brave enough to short NVDA.
mark_l_watson · 48m ago
I think that NVIDIA’s moat is the US government. Remember our government’s efforts to prevent the use of Huawei cell infrastructure in Europe and around the world?
I am a long time fan of Dave Sacks and the All In podcast ‘besties’ but now that he is ‘AI czar’ for our government it is interesting what he does not talk about. For example on a recent podcast he was pumping up AI as a long term solution to US economic woes, but a week before that podcast, a well known study was released that showed that 95% of new LLM/AI corporate projects were fails. Another thing that he swept under the rug was the recent Stanford study that 80% of US startups are saving money using less expensive Chinese (and Mistral, and Google Gemma??) models. When the Stanford study was released, I watched All In material for a few weeks, expecting David Sack’s take on the study. Not a word from him.
Apologies for this off-topic rant but I am really concerned how my country is spending resources on AI infrastructure. I think this is a massive bubble, but I am not sure how catastrophic the bubble will be.
heavyset_go · 17m ago
> Remember our government’s efforts to prevent the use of Huawei cell infrastructure in Europe and around the world?
The US is burning good will at an alarming rate, how long will countries keep paying a premium to be spied on by the US instead of China?
dworks · 1h ago
"Your margin is my opportunity" as someone said. Certainly Google must have plans to sell its chips externally with this much up for grabs?
heavyset_go · 16m ago
They make more money using them themselves or renting out their time to others.
mark_l_watson · 35m ago
I was also wondering if Google would try to make profit from selling TPUs, but they probably won’t because:
At least for me, Google has some real cachet and deserves kudos for not losing money selling Gemini services, at least I think it is plausible that they are already profitable, or soon will be. In the US, I get the impression that everyone else is burning money to get market share, but if I am wrong I would enjoy seeing evidence to the contrary. I suspect that Microsoft might be doing OK because of selling access to their infrastructure (just like Google).
Mistletoe · 16m ago
Do you have a link or references showing Google isn’t losing money on Gemini?
A long time ago I worked as a contractor at Google, and that experience taught me that they don’t like things that don’t scale or are inefficient.
alephnerd · 30m ago
There's no point selling TPUs when you can bundle TPU access as part of much more profitable training services. The margins are much higher providing a service as part of GCP versus selling.
hiddencost · 20m ago
Fabrication is the bottle neck. They can't even meet internal demand.
mrktf · 1h ago
As long as only TMSC is only top performance chip producer and it is possible to reserve all it manufacturing capacity for one two clients the NVIDIA will hold without problem...
My opinion, the problems for NVIDIA will start when China ramp up internal chip manufacturing performance enough to be in same order of magnitude as TMSC.
user34283 · 52m ago
I'm not knowledgeable about this, but I wonder how important performance really is here.
Wont it be enough to just solder on a large amount of high bandwidth memory and produce these cards relatively cheaply?
alephnerd · 37m ago
> but I wonder how important performance really is here.
Perf is important, but ime American MLEs are less likely to investigate GPU and OS internals to get maximum perf, and just throw money at the problem.
> solder on a large amount of high bandwidth memory and produce these cards relatively cheaply
HBM is somewhat limited in China as well. CXMT is around 3-4 years behind other HBM vendors.
That said, you don't need the latest and most performant GPUs if you can tune older GPUs and parallelize training at a large scale.
-----------
IMO, Model training is an embarrassingly parallel problem, and a large enough cluster leveraging 1-2 generation older architectures that is heavily tuned should be able to provide similar performance to train models.
This is why I bemoan America's failures at OS internals and systems education. You have entire generations of "ML Engineers" and researchers in the US who don't know their way around CUDA or Infiniband optimization or the ins-and-outs of the Linux kernel.
They're just boffins who like math and using wrappers.
That said, I'd be cautious to trust a press release or secondhand report from CCTV, especially after the Kirin 9000 saga and SMIC.
But arguably, it doesn't matter - even if Alibaba's system isn't comparably performant to an H20, if it can be manufactured at scale without eating Nvidia's margins, it's good enough.
TylerE · 45m ago
Isn’t memory production relatively limited also?
TSiege · 1h ago
They are currently doing this. It’s part of their Made in China 2025 plan
xbmcuser · 1h ago
google has already started offering its TPUs to other neocloud providers
If CUDA isn't that strong of a moat/tie-in and Chinese tech companies can seemingly reasonably migrate to these chips, why hasn't AMD been able to compete more aggressively with nVidia on a US/global scale when they had a much longer head start?
brookst · 1h ago
1. AMD isn’t different enough. They’d be subject to the same export restrictions and political instability as Nvidia, so why would global companies switch to them?
2. CUDA has been a huge moat, but the incentives are incredibly strong for everybody except Nvidia to change that. The fact that it was an insurmountable moat five years ago in a $5B market does not mean it’s equally powerful in a $300B market.
3. AMD’s culture and core competencies are really not aligned to playing disruptor here. Nvidia is generally more agile and more experimental. It would have taken a serious pivot years ago for AMD to be the right company to compete.
chii · 1h ago
AMD probably don't have chinese state backing, presumably, where profit is less of a concern and they can do it unprofitably for many years (decades even) as long as the end outcome is dominance.
dworks · 1h ago
Most chipmakers in China are making or have made their new generation of products CUDA-compatible.
eunos · 1h ago
Because Cuda moat in China is wrecked artificially by political reason rather than technical reason
h1fra · 4m ago
If CUDA is nvidia's moat, which has basically created a monopoly, how long until there is an anti-monopoly trial against them in EU or even in the US?
pixelesque · 1h ago
Note also that today China has told its tech companies to cancel any NVIDIA AI chip orders and not to order any more:
Chinese tech dominance is inevitable and anything the US tries to do to contain it will just hasten the inevitable.
glimshe · 1h ago
We've heard that about Japan in the 80s and the Soviet Union a couple of decades earlier. While China is a mighty competitor, they also have structural problems they don't hesitate to sweep under the rug.
The jury is out there about whether China can take a meaningful lead in any major technological field the US and Europe are actively invested in.
sschueller · 52m ago
> they also have structural problems they don't hesitate to sweep under the rug
I have the feeling the US is creating giant problems by putting massive tariffs on allies and pretending they don't hurt themselves.
9dev · 46s ago
The tariffs are really just a symptom of the underlying disease that is fully eroded trust in the stability of the United States. If everything can change at any time, and the president makes up his mind about anything from tariffs to wars to brand logos, turning a full 180 degrees every so often, how could you do long-term business?
mark_l_watson · 25m ago
I think that The Plaza Accord (1985) ended up crippling Japan economically. The Plaza Accord is an excellent example of my country benefiting from military and economic power - unfortunately, the days of us getting away with this kind of behavior are probably over.
That said, we will probably get away with bullying Europe for a while longer. Canada seems to be standing up to USA pressure fairly well. Europe needs to do the same, and they will probably eventually get there.
xbmcuser · 58m ago
Japan was destroyed by US as it was dependent and subservient to US as a market as well with US army and navy all over Japan. They unlike China could not say fuck off
jcfrei · 42m ago
Japan wasn't "destroyed" - they fell into the same trap that most emerging countries fall into eventually. Massive economic growth -> people become more wealthy -> they put it all into real estate -> real estate market collapses -> people are disillusioned, stop spending and growth crumbles. Happens to many nations that try to enter the group of high-income economies, same with China. The problem is that people don't trust any other asset besides housing to put their savings in. That creates a bubble and a lack of private investment in other parts of the economy.
dworks · 38m ago
look up the plaza accord. It led to a bubble that eventually burst and an uncompetitive export industry as the JPY doubled.
jcfrei · 22m ago
Two sides of the same coin. The yen appreciation didn't change the trade deficit the US had with Japan substantially. Japan's own actions after the plaza accord (very loose monetary policy) lead to the asset bubble I described. That's because domestic consumption was weak and everyone used excess savings for the housing market - rather than buying more goods domestically. Which lead to the bubble I described.
dworks · 8m ago
If you read the Wikipedia article more carefully you would have understood that the loose monetary policy was an effect of the Plaza Accord, hence why I mentioned it.
csomar · 18m ago
I kinda feel their bubble burst would have happened anyway but they wouldn’t treat themselves to a plaza accord kind of deal.
loudmax · 31m ago
Unfortunately for the US, the administration is also furtively generating brand new structural problems.
Have you been living under a rock the past couple of years?
rabidonrails · 37m ago
Don't be duped by China's clean energy talk. Their energy infra is mainly coal and they continue to build (dirty) coal plants.
They sell you solar infra so that you can feel good about protecting the world while they continue to build coal plants. For reference, in 2023 they built 95% of the world's new coal plants...
Don't be fooled.
rapsey · 7m ago
They also connected more solar to their grid than the rest of the world combined. China is massively increasing their power generation capacity and yes most of it is still coal. They are also building 20+ nuclear reactors. The scale of what China is doing is mind boggling.
smokefoot · 1h ago
Chinese semiconductor dominance is not imminent and US containment has been somewhat effective. I don’t think that will hold on a generational timeline, but it will be hard to overcome.
brookst · 1h ago
You don’t think the export controls on Nvidia chips accelerated Chinese investment in ML processors and therefore their independence -> dominance in the space?
rapsey · 1h ago
Semiconductor lead is inevitably going to fall within the decade. So will the military hopes of ever protecting Taiwan.
sampullman · 46m ago
That's a very pessimistic take, or optimistic I guess, depending on perspective.
Looking at the Chinese semiconductor development trajectory, and considering that TSMC won't be sitting on their hands, "within a decade" seems really unlikely.
windexh8er · 42m ago
I was under the impression, for years, that the US had the appropriate government, scientists and engineering in place to protect the castle. However given what I've seen in the last few years - I agree that it seems inevitable China will surpass the US in the next decade and will hold both cards and a grudge.
It's amazing how China has doubled down into STEM and green energy while the US has done exactly the opposite. The CHIPS Act propped up a company further driven into the ground by Pat Gelsinger. The last few administrations have had no focus on driving innovation and technology - only propping up the Tech Bro market making money off of attention and ads. Maybe, just maybe, the US should stop electing geriatric and short term gains ignorance?
The US needs to dig its head out of its ass if it wants to continue to be recognized as the global power it once was.
papageek · 30m ago
Tries to do to contain.. like letting u.s. companies pump trillions into the Chinese economy?
pjmlp · 1h ago
See Huawei and Xiaomi everywhere else outside US, or how encryption standards went down in the days of PGP book with the printed code.
ajsnigrutin · 1h ago
Let's be fair, US export controls are one of the reasons that China is ramping up research/development of such tech (especially AI now).
Considering the amount of sanctions coming from US (and EU), it's no wonder that "the rest of the world" is trying to "build their own" <thing> now.
rapsey · 6m ago
Yep that is what I meant.
narrator · 1h ago
Dialectical Materialism much?
torginus · 1h ago
There's a very important point made in the article - with recent export controls, domestic Chinese firms don't need to beat Nvidia's best, but only the cut-down chips cleared for Chinese export.
jarym · 1h ago
The AI race is like the nuclear arms race. Countries like China will devote an inordinate amount of resources to be the best - it may take a year or two, but in the grand scheme of things that is nothing.
And NVIDIA will lose its dominance for the simple reason that the Chinese companies can serve the growing number of countries under US sanctions. I even suspect it won't be long before the US will try to sanction any allies that buy Chinese AI chips!
WhereIsTheTruth · 37m ago
> And NVIDIA will lose its dominance
They are vendor locking industries, i don't think they'll loose their dominance, however, vendor locked companies will loose their competitiveness
TSiege · 1h ago
This is not true and a lot of Nvidi’s chips are smuggling into the country. There’s a ton of domestic pressure to be the leading chip producers. It’s part of China’s strategic plan called Made in China 2025
MonkeyClub · 22m ago
This conveniently coincides with China banning purchases of Nvidia AI chips:
Several years ago, whenever some Chinese engineers dared to propose using some Chinese parts, the challenges he/she had to face is always "who is going to be responsible if it is not reliable enough for its quality?"
Nowadays, whenever some Chinese engineers dared to propose using some American parts, the challenges he/she had to face is always "who is going to be responsible if it is not reliable enough for its supply?"
aurareturn · 48m ago
US government f'ed over Nvidia's China market dominance in order to help OpenAI, Google, Anthropic, xAI.
China shouldn't be buying H20s. Those are gimped 3 year old GPUs. If Nvidia is allowed to sell the latest and greatest in China, I think their revenue would jump massively.
jarym · 1h ago
One of these headlines in the next few months will spark a US market selloff greater than what we saw on the initial DeepSeek release.
I believe about 1000 S&P points down - to just above the trade war lows from April.
China, admittedly full of smart and hard working people, then just wakes up one day an in a few years covers the entire gap, to within some small error?
How is this consistent? Either:
- The Chinese GPUs are not that good after all
- Nvidia doesn't have any magical secret sauce, and China could easily catch up
- Nvidia IP is real but Chinese people are so smart they can overcome decades of R&D advantage in just s few years
- It's all stolen IP
To be clear, my default guess isn't that it is stolen IP, rather I can't make sense of it. NVDA is valued near infinity, then China just turns around and produces their flagship product without too much sweat..?
No, that's not really why. It is because nobody else has their _ecosystem_; they have a lot of soft lock-in.
This isn’t just an nvidia thing. Why was Intel so dominant for decades? Largely not due to secret magic technology, but due to _ecosystem_. A PPC601 was substantially faster than a pentium, but of little use to you if your whole ecosystem was x86, say. Now nvidia’s ecosystem advantage isn’t as strong as Intel’s was, but it’s not nothing, either.
(Eventually, even Intel itself was unable to deal with this; Itanium failed miserably, largely due not to external competition but due to competition with the x86, though it did have other issues.)
It was also frustratingly predictable from the moment the US started trying to limit the sales of the chips. America has slowed the speed of Chinese AI development by a tiny number of years, if that, in return for losing total domination of the GPU market.
That’s not to say I’m brave enough to short NVDA.
I am a long time fan of Dave Sacks and the All In podcast ‘besties’ but now that he is ‘AI czar’ for our government it is interesting what he does not talk about. For example on a recent podcast he was pumping up AI as a long term solution to US economic woes, but a week before that podcast, a well known study was released that showed that 95% of new LLM/AI corporate projects were fails. Another thing that he swept under the rug was the recent Stanford study that 80% of US startups are saving money using less expensive Chinese (and Mistral, and Google Gemma??) models. When the Stanford study was released, I watched All In material for a few weeks, expecting David Sack’s take on the study. Not a word from him.
Apologies for this off-topic rant but I am really concerned how my country is spending resources on AI infrastructure. I think this is a massive bubble, but I am not sure how catastrophic the bubble will be.
The US is burning good will at an alarming rate, how long will countries keep paying a premium to be spied on by the US instead of China?
At least for me, Google has some real cachet and deserves kudos for not losing money selling Gemini services, at least I think it is plausible that they are already profitable, or soon will be. In the US, I get the impression that everyone else is burning money to get market share, but if I am wrong I would enjoy seeing evidence to the contrary. I suspect that Microsoft might be doing OK because of selling access to their infrastructure (just like Google).
A long time ago I worked as a contractor at Google, and that experience taught me that they don’t like things that don’t scale or are inefficient.
My opinion, the problems for NVIDIA will start when China ramp up internal chip manufacturing performance enough to be in same order of magnitude as TMSC.
Wont it be enough to just solder on a large amount of high bandwidth memory and produce these cards relatively cheaply?
Perf is important, but ime American MLEs are less likely to investigate GPU and OS internals to get maximum perf, and just throw money at the problem.
> solder on a large amount of high bandwidth memory and produce these cards relatively cheaply
HBM is somewhat limited in China as well. CXMT is around 3-4 years behind other HBM vendors.
That said, you don't need the latest and most performant GPUs if you can tune older GPUs and parallelize training at a large scale.
-----------
IMO, Model training is an embarrassingly parallel problem, and a large enough cluster leveraging 1-2 generation older architectures that is heavily tuned should be able to provide similar performance to train models.
This is why I bemoan America's failures at OS internals and systems education. You have entire generations of "ML Engineers" and researchers in the US who don't know their way around CUDA or Infiniband optimization or the ins-and-outs of the Linux kernel.
They're just boffins who like math and using wrappers.
That said, I'd be cautious to trust a press release or secondhand report from CCTV, especially after the Kirin 9000 saga and SMIC.
But arguably, it doesn't matter - even if Alibaba's system isn't comparably performant to an H20, if it can be manufactured at scale without eating Nvidia's margins, it's good enough.
2. CUDA has been a huge moat, but the incentives are incredibly strong for everybody except Nvidia to change that. The fact that it was an insurmountable moat five years ago in a $5B market does not mean it’s equally powerful in a $300B market.
3. AMD’s culture and core competencies are really not aligned to playing disruptor here. Nvidia is generally more agile and more experimental. It would have taken a serious pivot years ago for AMD to be the right company to compete.
https://www.ft.com/content/12adf92d-3e34-428a-8d61-c91695119...
The jury is out there about whether China can take a meaningful lead in any major technological field the US and Europe are actively invested in.
I have the feeling the US is creating giant problems by putting massive tariffs on allies and pretending they don't hurt themselves.
That said, we will probably get away with bullying Europe for a while longer. Canada seems to be standing up to USA pressure fairly well. Europe needs to do the same, and they will probably eventually get there.
Have you been living under a rock the past couple of years?
They sell you solar infra so that you can feel good about protecting the world while they continue to build coal plants. For reference, in 2023 they built 95% of the world's new coal plants...
Don't be fooled.
Looking at the Chinese semiconductor development trajectory, and considering that TSMC won't be sitting on their hands, "within a decade" seems really unlikely.
It's amazing how China has doubled down into STEM and green energy while the US has done exactly the opposite. The CHIPS Act propped up a company further driven into the ground by Pat Gelsinger. The last few administrations have had no focus on driving innovation and technology - only propping up the Tech Bro market making money off of attention and ads. Maybe, just maybe, the US should stop electing geriatric and short term gains ignorance?
The US needs to dig its head out of its ass if it wants to continue to be recognized as the global power it once was.
Considering the amount of sanctions coming from US (and EU), it's no wonder that "the rest of the world" is trying to "build their own" <thing> now.
And NVIDIA will lose its dominance for the simple reason that the Chinese companies can serve the growing number of countries under US sanctions. I even suspect it won't be long before the US will try to sanction any allies that buy Chinese AI chips!
They are vendor locking industries, i don't think they'll loose their dominance, however, vendor locked companies will loose their competitiveness
https://news.ycombinator.com/item?id=45275070
Nowadays, whenever some Chinese engineers dared to propose using some American parts, the challenges he/she had to face is always "who is going to be responsible if it is not reliable enough for its supply?"
China shouldn't be buying H20s. Those are gimped 3 year old GPUs. If Nvidia is allowed to sell the latest and greatest in China, I think their revenue would jump massively.
I believe about 1000 S&P points down - to just above the trade war lows from April.