Nvidia CEO Jensen Huang, on Monday, said he will "prioritize" Japan for batches of GPUs to help develop the nation's AI industry, promising partnerships with local giants including Softbank to help develop the industry locally.

"Demand is very high, but I promised the prime minister we will do our very, very best to prioritize Japan's requirements for GPUs," Huang is quoted as saying. "In combination with generative AI and Japan's expertise in manufacturing, the future of robotics could be revolutionized here in Japan."

Japan's NTT, Sakura Internet, NEC, and Softbank are reportedly working with the company to develop AI solutions to automate various processes in their respective companies, something that's necessary in a country struggling with a chronic labor shortage.

Huang also said that Nvidia will work with Japan on building out more AI-enabled data centers.

Nvidia is expected to be constrained by its manufacturing partners such as Taiwan Semiconductor (TSMC).

Like many chip companies, Nvidia only designs chips, it doesn't manufacture them. TMSC provides these "chip plants," and the company is said to be considering building a third fab in Japan to meet demand. 

Japan latest nation to want GPU reserve 

Japan is the latest country to look to GPUs as a national strategic asset.

Earlier this year, the United Arab Emirates, Saudi Arabia, and the UK said that they were each planning on building their own GPU stockpiles -a necessity for countries that want to have a leading role in this frontier industry.

China is also trying to build out its supply of GPUs, but this is being complicated by US sanctions that prohibit chips of a certain speed from being exported.

So-called sanctions-friendly chips are in the pipeline from Nvidia but are reportedly delayed.

These restrictions have meant that firms in China are reportedly re-purposing consumer-grade GPUs to fill this gap for processing-hungry companies with AI workloads. Recent data from Jon Peddie Research shows that the PC-based GPU market grew to 71.9 million units, while PC CPU shipments fell by 5.1% year over year.  

Nvidia faced increased scrutiny

Authorities in the US are not fans of Nvidia's tactic of creating regulatory-compliant chips for export to China, with Secretary of Commerce Gina Raimondo recently saying, "If you redesign a chip around a particular cut line that enables them to do AI, I'm going to control it the very next day."

Recently, Taiwan's economics minister Wang Mei-hua reminded firms on the island to be compliant with US rules. A delegation of US officials is expected to arrive in Taipei later in December to meet with industry officials to discuss the regulations. 

China's Tencent, Baidu, Alibaba, and Bytedance were all large purchasers of Nvidia's H100 GPUs with the four companies collectively purchasing 125,000 of the chips.

In comparison, Microsoft and Meta each reportedly purchased 150,000 of the GPUs in 2023 with Google and Amazon purchasing 50,000 each.

Nvidia's Huang has noted that US sanctions mean there's a massive incentive for Chinese chip designers to play catch-up to Nvidia, and there are dozens of companies trying.

So far, the latest GPU chips from China's Longsoon have a long way to go, according to publicly available benchmarks.