The
artificial
intelligence
behind
ChatGPT-like
products
and
autonomous
driving
is
driving
enormous
demand
for
Nvidia’s
chips
in
China.
In
the
past
week,
however,
analysts
cut
their
Nvidia
price
targets
after
news
the
U.S.
plans
to
ban
the
sale
of
more
high-end
semiconductors
to
China.
The
country
accounts
for
at
least
one-fifth
of
Nvidia’s
big
data
center
business
.
Chinese
companies
also
dominate
the
burgeoning
electric
car
market
,
where
Nvidia
has
had
a
fast-growing
business
of
selling
chips
for
assisted
and
fully
autonomous
driving.
When
it
comes
to
such
chips
for
cars,
Nomura
analysts
said
there’s
little
reason
to
worry.
Their
analysis
of
U.S.
rules
found
regulators
are
focused
on
two
technical
specifications
—
which
the
Nvidia
Drive
AGX
Orin
chip
meets
in
part.
But
the
chip
still
isn’t
powerful
enough
to
cross
a
key
performance
metric,
and
it
isn’t
used
in
data
centers,
the
report
said.
“Therefore,
Orin
X
chips
remain
safe
and
are
not
impacted
by
the
new
regulation,
indicating
the
rest
of
the
existing
auto
chips
should
not
be
impacted
by
the
new
rule
as
well,”
Nomura
China
Technology
analyst
Joel
Ying
and
a
team
wrote
Thursday.
Auto
chip
market
BYD,
Nio
,
Li
Auto
and
Xpeng
are
among
the
China-based
electric
automakers
using
the
Orin
chip.
Xpeng,
which
currently
offers
the
closest
equivalent
to
Tesla’s
Full
Self-Driving
in
China,
is
set
to
hold
a
tech
day
on
Oct.
24.
Meanwhile,
other
companies
are
launching
alternatives
to
Nvidia’s
products
for
AI
computing.
U.S.-based
Kneron
is
using
a
different
approach
to
AI
chips
that
the
company’s
CEO
Albert
Liu
claims
is
based
on
neuroscience
—
instead
of
the
graphics
processing
that
Nvidia
uses.
He
told
me
at
CNBC’s
East
Tech
West
conference
last
week
that
Kneron’s
revenue
for
the
fourth
quarter
is
forecast
to
grow
by
double-digit
percentage
points
from
the
third
quarter,
and
“multiple
times”
from
the
fourth
quarter
last
year.
The
company
is
working
with
Apple
supplier
Foxconn
for
the
development
of
automotive
AI
,
according
to
an
announcement
in
late
September.
Weeks
earlier,
Kneron
had
unveiled
its
KL730
chip
and
claimed
it
is
150%
to
200%
times
more
energy
efficient
than
peers.
Its
applications
include
advanced
driving
assistance
systems.
Other
customers
include
Quanta
Cloud
Technology,
South
Korean
search
giant
Naver,
and
Japanese
and
German
auto
giants,
Liu
said.
He
didn’t
name
the
automakers,
but
claimed
that
overall
Kneron
is
shipping
“millions
of
chips”
annually.
“Everyone
noticed
that
GPU
is
not
the
perfect
solution
for
AI
so
it’s
more
easy
to
convince
people
to
use
our
solution,”
he
said.
Kneron
raised
$49
million
in
late
September.
Simply
testing
AI
models
also
requires
significant
processing
power,
which
can
get
expensive
to
operate
amid
a
shortage
of
chips.
“Charging
by
GPU
per
hour
is
a
common
global
industry
practice
with
global
cloud
players
charging
USD1-3
per
GPU
hour
for
use
of
NVIDIA’s
A100
80G
chip,”
HSBC
analysts
said
in
an
Oct.
17
report.
Nvidia
said
in
an
SEC
filing
the
new
U.S.
restrictions
would
affect
sales
of
its
A100
chips
and
many
other
products
to
China,
but
did
not
mention
Orin.
The
new
U.S.
rules
are
set
to
take
effect
in
about
a
month.
Homegrown
chip
companies
While
Nvidia
may
get
a
pass
on
automotive
chips
in
China
for
now,
the
new
measures
do
indicate
more
advanced
ones
in
the
future
may
require
a
license
from
the
U.S.
government
if
they
are
shipped
to
China,
the
Nomura
analysts
said.
In
the
automotive
chip
category,
they
noted
Nvidia’s
Thor
chip
and
Qualcomm’s
Snapdragon
Ride
Flex
chip
both
fall
into
that
more
advanced
category.
Chinese
companies
have
meanwhile
been
building
homegrown
alternatives.
Autonomous
truck
driving
company
Inceptio
CEO
Julian
Ma
told
me
in
August
the
company
is
using
a
chip
from
Chinese
startup
Horizon
Robotics.
Ma
said
Inceptio
has
enough
computing
power
to
support
it
for
the
next
three
years.
The
startup
currently
sells
trucks
with
assisted-driving
software
to
logistics
companies
in
China.
Other
kinds
of
automation
in
China
today
that
stock
analysts
are
watching
do
not
even
need
such
advanced
computing
power.
In
the
past
week,
Nomura
and
HSBC
analysts
both
raised
their
price
targets
for
mainland
China-traded
Inovance,
which
HSBC
describes
as
“the
largest
domestic
factory
automation
solution
supplier
in
China
in
terms
of
2022
revenue.”
HSBC
has
a
price
target
of
83
yuan,
up
from
76
yuan
previously.
That
marks
upside
of
more
than
30%
from
Inovance’s
close
on
Thursday.
Nomura,
which
like
HSBC
has
a
buy
rating
on
Inovance,
raised
its
price
target
to
76
yuan,
up
from
74
yuan
previously.
“Management
attributed
the
healthy
revenue
growth
to
the
solid
growth
of
its
[new
energy
vehicle]
and
automation
businesses,
offset
by
demand
weakness
in
its
elevator
business
during
the
quarter,”
Nomura
analysts
wrote
in
an
Oct.
17
report.
The
analysts
noted
Inovance
has
grown
its
market
share
this
year
for
motor
controllers
and
powertrain
systems
in
China.
“We
believe
Inovance’s
market
share
gain
in
the
domestic
[new
energy
market
was
mainly
fuelled
by
wallet
share
expansion
in
key
customers
such
as
GAC,”
the
Nomura
report
said,
noting
the
firm
also
has
a
buy
rating
on
the
Hong
Kong-listed
automaker.
