NVIDIA’s New R&D Facility in Shanghai: Jensen’s Strategy to Revive Business in China

NVIDIA is reportedly on track to establish a new research and development center in China. This initiative comes as CEO Jensen Huang expresses concerns over the company’s potential market share loss amid increasing global competition.

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The situation for NVIDIA in China is becoming increasingly challenging. Recent rounds of U. S.export restrictions have complicated the company’s relationship with this vital market. Simultaneously, fierce competition from local giants such as Huawei has put NVIDIA’s position as a leading AI provider at risk. As a response, Huang has announced plans for a dedicated R&D facility in Shanghai, aimed at creating tailored AI solutions that directly meet the needs of Chinese customers. This report was first highlighted by The Financial Times.

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In a strategic move, NVIDIA plans to retain its core technologies outside of China to safeguard its proprietary designs. Instead, the focus at the Shanghai R&D center will be on leveraging local talent for research initiatives. This approach aims to prevent talent drain to competitors like Huawei, which has a notorious reputation for recruiting employees from rival companies. Despite the constraints posed by U. S.legislation, Huang has emphasized the necessity of maintaining a presence in the Chinese market, indicating that failure to do so could result in competitors stepping in.

We want to build the world’s AI [where] American standards are being adopted around the world. If we leave a market altogether, there’s no question somebody else would step in. Huawei, for example, is very formidable…they’ll step in.

– NVIDIA’s CEO at Milken Institute event

Currently, NVIDIA is offering its L20 AI chips in Chinese markets, following the recent H20 export restrictions. The company is also in the process of rolling out new Hopper and Blackwell models that align with U. S.regulations. However, major Chinese tech companies are increasingly turning to alternatives, including those from Huawei, due to the uncertainty surrounding NVIDIA’s offerings. This trend underscores the notion that NVIDIA is indeed losing its foothold in China.

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