Nvidia (NVDA) Does Not Face “Immediate Threat” From Huawei, Expert Says

The AI chips being developed by Chinese tech giant Huawei primarily compete with Nvidia’s (NVDA) H100 chips which were first unveiled in 2022, and Huawei does not pose an “immediate threat” to NVDA, Olivier Blanchard, the Research Director of Futurum Group told Schwab Network recently.

Last year, Nvidia released its Blackwell chips that are much more powerful than the H100 processors.

Blanchard suggested that NVDA’s market share is likely to drop over the longer term, but he added that no company currently provides chips that are comparable to those of NVDA,  while NVDA’s position in chips is similar to that of Apple (AAPL) in smartphones.

Assessing the Threat From Huawei

Huawei is “filling the gap” created by U.S. export controls which prevent NVDA from providing advanced AI chips to Chinese entities, Blanchard said.

Although Huawei will “eventually” produce chips as powerful as NVDA’s most advanced offerings, the Chinese firm has not yet been able to do so, according to the research director.

Huawei’s efforts should be seen as “a shot across the bow” to Nvidia and the U.S., Blanchard stated. Also noteworthy is that NVDA’s direct sales to China only account for 13% to 15% of its total revenue, he said.

Nvidia’s Outlook

It’s “unrealistic” to expect the chip maker to retain the huge market share that it has controlled in recent years, the expert stated.

But in the long term, stronger competition will spur NVDA to be more innovative, Blanchard suggested.

Comparing NVDA’s position in chips to that of Apple Inc (AAPL) in smartphones, the expert said that NVDA “still has a lot of cards to play.”

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Disclosure: None. This article is originally published at Insider Monkey.