Nvidia CEO Jensen Huang said China's manufacturing capabilities should not be underestimated. CNBC's Evelyn Cheng reports from Beijing.

Beijing

Nvidia CEO Jensen Huang, speaking at a supply chain expo in Beijing, underscored the competitive landscape in China, particularly highlighting Huawei's capabilities in AI and manufacturing. Huang noted that Huawei's integrated approach, from chip development to cloud infrastructure, allows it to compete directly in the market, and he cautioned against underestimating China's manufacturing prowess.

Huang also addressed the impact of U.S. export controls on Nvidia's business in China, mentioning ongoing license processing and the company's efforts to remain competitive. He expressed enthusiasm for AI's application in manufacturing and robotics, and acknowledged the growing interest among foreign investors in China's AI sector.

Nvidia CEO Huang calls Huawei a formidable competitor

So, Jensen Huang is here in Beijing, he gave a speech at the opening of the Supply Chain Expo in the morning on Wednesday, and then he spent about 90 minutes with reporters, first kind of in a very casual Q&A outside in the courtyard under the sun, and then he realized, oh, my, we actually have an air-conditioned room, and let's all go in there. I mean, he really did not give us that much details in terms of what's the status of these H20 Lesser Advanced U.S. Export Control Compliant ships coming into China. He said that the U.S. government is in the process of processing the licenses, but NVIDIA hasn't received them yet, and in terms of Chinese companies' orders, he did not provide that much detail, making it sound like he was quite busy, but maybe his team had gotten orders from some companies, potentially Tencent. So Jensen's really here trying to be a business person. It's a huge market for the company. There's billions and billions of dollars that the company could make here, and they've talked about how much their company has lost because they have not been able to sell into China, and so he was really complimentary of a lot of the Chinese AI models, and also Xiaomi. He met with the Xiaomi CEO, Lei Jun, and really said he even wants to buy one of the Xiaomi electric cars, as Xiaomi uses the NVIDIA Thor ships for some of its vehicles. So all of this, Jensen is here in China and trying to distance himself from the politics, saying that his understanding is the NVIDIA chips and the Chinese control over rare earths is part of the exchange between U.S. and China, but he doesn't know exactly what is going on at that high level between the U.S. and China. So he's just trying to make sure his company can stay competitive in this entire global AI race. Let's have a listen to what he said about the investing plans for China. So Jensen Huang has really emphasized a lot of the competition in China, especially Huawei, and in the same breath, he talked about Huawei being a formidable competitor and also how nobody should be underestimating China's manufacturing capabilities, and that's something Huawei from building its own chip and entire cloud system, Jensen Huang pointed out that Huawei can actually go to market directly because it has this entire infrastructure. And my understanding is too that Huawei has been sending people to mines, to the electric car industry, to many of these really vertical and potentially dry areas of AI application and developing AI simultaneously with the industry. So that's a huge edge of competition in terms of how AI actually makes money. And Jensen Huang seems like he has his eye on this because he said that the RTX Pro, which is also coming to China, the big focus there is going to be on factories and manufacturing. So while there's lots of excitement about NVIDIA becoming this $4 trillion company, there are more and more questions about what does it mean in terms of AI's usefulness? And that's something that Jensen said he's watching himself. Back to you. Ev, this new chip, the RTX Pro, which is supposed to launch in, I think, September, right? Is this the same thing as the budget sort of no frills without the bells and whistle chip that we were talking about a couple of days ago? And if it is, then if it's focused on manufacturing in China, this addresses robotics as well, does it not? Not so much humanoid robots, but because, I mean, China probably has the largest installed base of robotics in manufacturing right now. Right. So it sounds like this chip can support sort of virtual environments where they could train or potentially even deploy some of this automation. And Jensen himself was very excited about the potential of AI for robotics. So he's seeing how AI is really being applied to in many aspects of China's economy. He mentioned a lot of the Chinese Internet apps during his opening speech, and he talked about a lot of other applications, even from DeepSea's open source model, which he said nearly 99 percent of companies and countries around the world are actually downloading locally and using it for things like health care and imaging. So it's not necessarily all the AI that's living on closed systems in the cloud, like ChatGPT currently is. So we'll have to see, you know, again, the big question, I think, is how is AI actually turned into something that matters for business instead of just all this training? And it seems like, you know, from Jensen's perspective, the industry is really shifting from this period of, OK, how are the models performing, how smart they are, but actually to how can they be applied, how useful they are. And China potentially has a big opportunity to play there. So Jensen doesn't want to miss out as a company. He's been telling the U.S. government that we can't miss out on this as a country. And if you read the latest edition of the China Connection newsletter, we talk about how foreign investors are really excited and looking for opportunities in China's AI market.

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