On April 11, the semiconductor industry was abuzz with news of Sitonholy, a Chinese partner of Nvidia, being added to the list of newly blacklisted firms. These Nvidia Sanctions are seen by industry insiders as part of the United States’ broader strategy to impose a comprehensive blockade against China, often referred to as the “Semiconductor Wall of Tears.”
Sitonholy, recognized as one of the leading Nvidia data centre product providers in China, has faced significant challenges following Nvidia’s ban on exporting its advanced A100 and H100 data-center graphics processing units (GPUs) to China.
Despite its strong sales track record, Sitonholy has been directly affected by the ban, leading to a shift in its product offerings and distribution strategies. This shift highlights the intricate web of international trade dynamics and the consequences of geopolitical tensions on global supply chains.
Nvidia Sanctions
Initially, after imposing Nvidia sanctions, the U.S. has previously overlooked indirect sales of its advanced chips to China through intermediaries like Sitonholy. This leniency is largely attributed to the significant revenue contribution from the Chinese market to major American companies. As of the third quarter of last year, China accounted for 22% of Nvidia’s and 27% of Intel’s revenues, highlighting the economic significance of the Chinese market for these companies.
With the imposition of sanctions by the United States, Sitonholy has been compelled to seek alternative solutions to meet the demands of its China-based clients. Nvidia Sanctions prompted the company to explore new GPU options, resulting in the adoption of replacements like the H20, L20, and L2 GPUs tailored specifically for the Chinese market.
However, despite these efforts, the blacklist has effectively terminated Sitonholy’s distributorship of Nvidia products, pushing the company to pivot towards selling primarily domestic chips to navigate the challenging landscape.
Sitonholy’s Response to Nvidia Sanctions
In response to the limitations imposed by the sanctions, Sitonholy has turned to Huawei Technologies’ Ascend 910B AI chips and other Huawei data-center solutions as viable alternatives to Nvidia’s offerings.
The Huawei 910B, positioned as a substitute for Nvidia’s A100 GPUs, has demonstrated commendable performance capabilities, achieving approximately 70% of the performance level of its Nvidia counterpart. This strategic shift underscores China’s broader efforts to reduce reliance on foreign technologies and bolster its domestic semiconductor industry amidst escalating trade tensions and
sanctions imposed by the US.
China’s Response to Nvidia Sanctions
China’s Ministry of Industry and Information Technology issued a directive instructing the country’s three major telecommunications providers — China Mobile, China Unicom, and China Telecom — to replace foreign-made CPUs by 2027, as reported by The Wall Street Journal on April 12. This move was seen as a retaliatory measure amid escalating tensions with foreign tech firms.
Intel and AMD, which collectively dominate over 95% of the global CPU market for telecommunications networks, have traditionally sold a significant portion of their chips to the Chinese market.
Furthermore, the case of Sitonholy reflects China’s intensified drive to bolster its semiconductor and technology sectors to safeguard national and industrial security. Huawei, in particular, has emerged as a key player in this endeavour, actively promoting an ecosystem centered on homegrown hardware and software solutions, exemplified by initiatives like HarmonyOS.
Despite facing formidable challenges posed by US sanctions and export controls, Huawei has persisted in advancing its capabilities, leveraging partnerships with domestic semiconductor manufacturers like Semiconductor Manufacturing International Corporation (SMIC) to develop cutting-edge technologies. As China endeavors to achieve technological self-sufficiency, the repercussions of Nvidia’s sanctions serve as a catalyst for accelerating the country’s pursuit of indigenous innovation and semiconductor autonomy.
