Consequences Of Chinese AI Companies Losing Access To Nvidia – NVIDIA Corporation (NASDAQ:NVDA)

In recent years, the number of applications for graphics processing units (“GPUs”) from Nvidia (NVDA) has expanded significantly. One of the more promising new growth areas for GPUs has to be Artificial Intelligence (“AI”). This is because high-end GPUs are considered to be much better suited for the kind of computational processing that are required in AI. Especially in comparison to central processing units.

The rise of AI has increased GPU demand in recent years. AI has, therefore, been a major plus for suppliers of high-end GPUs. The big beneficiary has been Nvidia, a company that dominates the supply of high-end GPUs together with Advanced Micro Devices (AMD). Since AI is expected to continue to grow at a rapid clip in the coming years and probably decades, Nvidia is seen as a great, if not the best, way to play the boom in AI.

But success breeds imitation. As a result, other companies are looking to get in on the act and enter the market for AI. Moreover, government policy can drastically affect companies and their market prospects. How the two can combine together to give Nvidia’s competition a leg up and deprive it of a major growth market is what is to be delved into greater detail.

U.S. sanctions a group of AI companies in China

A large number of companies have emerged in China that are focused on developing a wide-range of AI solutions. The newcomers include some of the biggest and most valuable AI companies in the world. As such, they’re a source of strong demand for the components needed in AI infrastructure, which includes GPUs.

For instance, SenseTime is considered to be the most valuable AI startup with a valuation of over $7 billion. Not only that, it’s also a major user of high-end GPUs. Its self-developed, large-scale, AI supercomputing platform can consist of over 14,000 GPUs. Such requirements are a welcome addition for a high-end GPU supplier like Nvidia.

However, the U.S. government has recently decided to impose sanctions…

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