A Pawn in the Chip War Nvidia Invests in China and Hires new Employees

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Undeterred by Washington's "chip war" against China, Nvidia is significantly increasing its workforce in the country. Bloomberg reports that the company plans to employ about 4,000 people in China by 2025, up from 3,000 at the start of 2024.

The surge in new hires underscores the importance of the Chinese market for Nvidia, a leading AI chip manufacturer, despite the ongoing U.S.-China technology and trade war. Following the launch of an antitrust investigation by Chinese authorities on December 12, 2024, Nvidia reaffirmed its commitment to the market in its official response.

China remains "an important market" for the company and it will continue to prioritize "providing Chinese customers with the best quality and highest performance products and services," according to Nvidia's press release on its Weibo channel in the People's Republic. The company will cooperate fully with the State Administration for Market Regulation (SAMR), under whose direction the antitrust probe is being conducted.

Investigations in China

SAMR surprisingly accused Nvidia of violating Chinese anti-monopoly laws four years after a takeover of the Israeli company Mellanox, which was also approved by Beijing at the time. Mellanox manufactures network accessories that are needed to build the same data centers for which Nvidia's GPUs are so popular. As a condition for allowing the 6.9 billion US dollar takeover, Nvidia had to promise in China, among other things, to "continue to provide relevant products to the Chinese market under fair, acceptable and non-discriminatory principles". However, this is precisely what Nvidia is no longer able to do as part of the US government's technology boycotts.

This is the first time that China's antitrust watchdogs have retroactively opened an investigation into a previously approved international merger. This is a clear sign that Beijing's main aim with the Nvidia probe is to send a political warning shot to future US President Donald Trump.

Although it is increasingly becoming a pawn in such political power games, Nvidia has so far stuck to its strategy of fighting as best it can for segments of the Chinese semiconductor market not affected by the US boycotts.

Less AI, more automotive

When the US Department of Commerce initially banned the sale of Nvidia's A100 and H100 chips to China in 2022, the company responded by developing less powerful variants of the same chips specifically for the Chinese market, including the A800. Subsequently, its export to China was also banned by the Bureau of Industry and Security of the US Department of Commerce.

Despite massive restrictions on business in China and the associated loss of revenue, Nvidia was still able to generate revenue of USD 10.3 billion (around EUR 9.8 billion) in China in its last full financial year, which ended in January 2024, accounting for around 17 percent of the company's global revenue. By October 29, 2024, the end of Nvidia's third financial quarter, the China business still accounted for an almost unchanged 17.9% of the AI chip manufacturer's global revenue.

However, more and more sales are now being made with products and services that are not directly affected by the US boycotts, such as those for autonomous driving. BYD and other Chinese car manufacturers like to install the "DRIVE Orin" SoC from Nvidia, which, according to a report in the Asia Times, now brings the American company around USD 1 billion in sales per year.

It is therefore these business areas, which have not been politically burdened to date, in which Nvidia is currently hiring a particularly large number of new employees. "Hundreds" of new employees have been recruited by Nvidia in China in 2024 for the autonomous driving division alone, reports DigiTimes. In Beijing alone, Nvidia is in the process of creating 200 new jobs for the development of autonomous driving functions, Bloomberg News recently reported. In total, the Nvidia workforce in the Chinese capital alone has recently grown by 600 new colleagues, reports the business agency. (sb)

*Henrik Bork, General Manager of AsiaWaypoint, Bejing, P.R. China