Editing by Greg Gao
China's domestic GPU companies are entering a long boom period, driven by dynamic developments in gaming and AI, and more demand for localized supply chain security and substitutions, an article by JW Insights analyst Li Xiaoyan says.
GPU is a hot sought-after field in China's capital market, with several GPU startups having raised a record amount of funding and launched new innovative products.
The Chinese market boom corresponds with the global GPU market in a new round of technological innovation for more diversified applications.
According to available statistics, the global GPU market size is worth $20 billion in 2020 and is projected to increase by 15% in 2021 and by an average of 13% from 2015 to 2025 per year, expanding from $8 billion to $35 billion.
Intel announced its return to the high-end GPU market with the new brand Arc and launched desktop and data center products on Intel Architecture Day, the competition for GPUs is heating up again.
Previous demand for GPUs comes from video decoding, encoding acceleration, and 2D/3D games. With the GPU's advantages in parallel processing and general-purpose computing, it has gradually expanded to the fields of servers, automobiles, bitcoin mining machines, artificial intelligence, and edge computing.
Other factors are driving up the GPU market, such as increasing graphics and 3D applications in various industries like automobiles, manufacturing, real estate, and healthcare. For example, to support manufacturing and design applications in the automotive sector, simulation software like Computer-Aided Design(CAD) and Computer-Aided Engineering (CAE) use GPUs to create vivid images or animations.
China's domestic companies are late-comers in the GPU market because of the higher technical barriers to enter and involving CUP and the operating system. Jingjia Micro(景嘉微), 709th and 716th Research Institute affiliated with China Shipbuilding Industry Corporation are the earliest group of GPU companies.
The explosion of AI technologies is bringing about opportunities for GPU companies in the country. GPU is gradually taking a dominant position in high-performance computing and cloud AI applications with a more robust performance in parallel computing, floating-point, and matrix operations.
China's drive to be self-reliant in key information technology areas in the wake of U.S. sanctions is also pushing for more local GPU substitutes. While Nvidia dominates the higher-end GPU with higher prices, there are needs for general-purpose GPUs with lower prices, thus providing potential for local players.
The general-purpose GPU market potential value is estimated at RMB 100 billion($15.5 billion) or more in China. Many GPU startups have sprung up in China in recent years. Almost all first-tier investment firms have participated in fundraising for these companies, repeatedly setting new records in the total amount.
Most startup team members come from well-known multinational GPU companies with rich experience, making rapid progress. Denglin Technology(登临科技), Iluvatar CoreX(天数智芯) and Vastai Technologies(瀚博半导体) are such companies that have released mass-produced GPU chips.
In the field of graphics GPU, Jingjia Micro(景嘉微) and Hangjin Technology(航锦科技) are the strong domestic players. Now Zhaoxin Semiconductor(兆芯) and Loongson(龙芯) also began to enter the GPU field, leveraging their overall R&D strength in CPU.
According to JW Insights estimates, there are needs for about 20 million servers and personal computers as domestic substitutes in China. In a five-to-ten year replacement cycle, the overall market potential is likely to reach RMB4.5 billion ($697 million), huge market potential for Chinese players.
IDC's forecast points to the bright picture as well: China's GPU server market will reach $6.4 billion by 2024. If the domestic GPU firms obtain a 30% share in 2024, that will be $2.2 billion market size.
At the same time, in conjunction with domestically-made CPUs and operating systems, Chinese GPUs will also expand in consumer markets quickly.
Compared with GPU giants such as Nvidia, which has more than 20 years of R&D experience, Li Xiaoyan's article pointed out that Chinese GPU players still have a long way to go.
The data shows that the top 20 companies in the global GPU sector account for 70% of the world's GPU patents. Nvidia, Intel, and AMD are also among the top three in the number of global patent families held in the GPU field.
GPU has a strong dependency on CPU and operating systems, posing another challenge for Chinese players.
But Li Xiaoyan believes that Chinese companies will gradually win more market shares with a more mature ecosystem under development, including more open-source resources, financial support, and, last but not the least, the vast market potential in China.