Nvidia's RTX6000D sees tepid demand in China amid price and performance concerns: report

Nvidia's new RTX6000D chip, designed for the Chinese market to comply with US export controls, is experiencing tepid demand from major tech firms like Alibaba and Tencent. Priced at approximately US$7,000, the chip is considered costly and underperforms compared to the higher-end RTX5090, which remains accessible via grey market channels at a lower cost, indicating challenges for Nvidia's strategy to navigate sanctions. Chinese companies are also awaiting other AI chip options, leading to a 0.8% dip in NVDA shares, though Wedbush analysts maintain a long-term bullish outlook on the company's China revenue potential despite current uncertainties.

Analysis

Nvidia's strategy to navigate U.S. export controls in China is facing significant headwinds, as its specifically designed RTX6000D chip is experiencing tepid demand from major technology firms including Alibaba and Tencent. The chip's poor reception stems from a severe price-performance imbalance; priced at approximately US$7,000, it underperforms superior models like the RTX5090, which, despite being officially banned, remains accessible on the grey market at less than half the cost. This creates a challenging competitive dynamic where Nvidia's compliant product is being undermined by its own non-compliant hardware. Furthermore, potential customers are adopting a wait-and-see approach, anticipating the release of other compliant Nvidia chips like the H20 or hoping for the approval of the more powerful B30A. While the report triggered a modest 0.8% decline in Nvidia's shares, Wedbush analysts note that both their models and Street consensus had already removed China contributions from forecasts, suggesting near-term expectations were low, though they maintain a long-term bullish view contingent on future product successes.

Key Decisions for Investors

• Investors should closely monitor the demand and sales data for Nvidia's forthcoming China-compliant chips, such as the H20, as the failure of the RTX6000D places greater importance on these future products to salvage revenue from the region.
• Given that analysts have reportedly already factored out China revenue, the key consideration is whether the stock's current valuation adequately reflects the heightened risk and uncertainty surrounding Nvidia's ability to operate effectively under the U.S. sanctions regime.
• The persistent availability and competitive pricing of banned high-end chips on the grey market represents a structural risk to Nvidia's China strategy, and this channel should be watched as a key indicator of the potential success or failure of any future compliant product launches.