It is reported that the US chip company NVIDIA has asked TSMC to speed up shipments, hoping that TSMC will complete the NVIDIA chip order that was previously planned to be completed in five months to help NVIDIA sell more GPU chips to the Chinese market as much as possible before the deadline before March 2023.
NVIDIA does this because of the difficulties it faces. NVIDIA's second-quarter results released this year showed that net profit plummeted 70%. This is mainly because the mining machine market that previously brought it a lot of revenue suddenly cooled down and graphics card sales quickly declined. At this time, the Chinese market is more important to it.
NVIDIA's performance shows that 26% of its revenue comes from the Chinese market, and the Chinese market is its fastest growing market at present, because the rapidly emerging technologies such as artificial intelligence and autonomous driving require NVIDIA's GPU chips. However, due to the requirements of the United States, NVIDIA will not be able to sell some high-end chips to the Chinese market since March 2023, which will cause great performance losses to it.
In fact, in addition to NVIDIA, American chip companies Intel and AMD are all seeking to speed up shipments to China. They are all facing similar problems with NVIDIA. They will not be able to sell high-end chips to the Chinese market after the deadline. However, these American chips are not having a good life now.
Intel should be the worst performer among American chip companies. Its performance in the second quarter of this year showed its first loss in more than 20 years. Other American chip companies have also fallen into a recession. They all expect that the performance in the next few quarters may decline further. If they are restricted from shipment to China next, their losses will be greater.
In fact, the global chip market is now in a situation of oversupply. After the US chip inventory has increased, South Korean chips have also begun to decline sharply since July. South Korea's chip exports in July and August fell by 22% and 24% respectively, mainly due to the sharp shrinkage of memory chips and exports to China. The data given by the municipal research agency IC insights said that the global DRAM chip scale was halved from June to July.
Before the United States further restricted the shipment of US chips to China, the progress made by China's chips in the past two years has caused panic in the overseas chip industry. China's chip production capacity has grown rapidly, driving China's chip imports in the first seven months of this year to reduce 43 billion chips, which means that China's self-sufficiency rate of mid- and low-end chips is rapidly increasing.
At this time, the United States further restricted the shipment of US chips to China, which undoubtedly further reduced the competitiveness of US chips. After all, many mid- and low-end chips in China can be self-sufficient, and only mid- and high-end chips need to be imported. However, the United States does not sell them. The mid- and low-end chips that the United States is willing to sell are no longer needed. China even now competes with the United States for the mid- and low-end chip market in the international market. China's chip export volume surged by more than 20% in the first half of the year.
This has formed a strange phenomenon. European, American, Japanese and Korean chip companies are competing for China's big customer - China has purchased 60% of the world's chips, but the United States does not allow American chips to sell high-end chips to China. This seems to have become the United States' hand and foothold of American chips. It is no wonder that American chips hope to sell large-scale products before the deadline and share the pie from the Chinese market.
Even if the high-end chips that the United States has begun to restrict, China is already accelerating its catching up. For example, the high-end GPU chip that NVIDIA is about to be restricted. A large number of GPU chip companies have emerged in China, one of which is still closely related to NVIDIA. It can be expected that Chinese companies will further adopt domestic GPU chips in this situation to accelerate the development of domestic GPU chips. It won’t take too long for China’s GPU chips to catch up with NVIDIA. At that time, American chips may regret it.
