Nvidia To Launch China-centric AI Chips Amid US Export Restraints

The U.S. chipmaker company, Nvidia, is set to commence mass production of its H20 artificial intelligence (AI) chip for China in the second quarter of 2024. The H20 chip is the most potent among three China-focused chips developed by Nvidia. Initially slated for a November 2023 launch, the plan encountered delays due to integration challenges faced by server manufacturers.

Nvidia’s AI Chip Plans for Q2 2024

According to a report by Reuters, sources familiar with the matter revealed that the H20 chip’s initial production volume would be restricted. In addition, they added that Nvidia is prioritizing fulfillment of orders primarily for major customers. In a previous report, it was indicated that Chinese companies were hesitant to procure the downgraded H20.

Moreover, the Chinese market considered exploring domestic alternatives amid concerns that the U.S. might impose tighter restrictions. Hence, last year, a popular Chinese search engine, Baidu, opted for AI chips from Huawei Technologies. This indicated a major shift away from Nvidia.

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However, to grab its position back in China, Nvidia has plans for two more chips, the L20 and L2, designed to comply with the new restrictions. The H20, L20, and L2 chips incorporate most of Nvidia’s latest AI features, But, they come with reduced computing power to ensure compliance with the recent regulations. The chipmaker is yet to announce any sales related to these three chips.

Earlier in December 2023, Nvidia introduced a modified version of an advanced gaming chip to adhere to the revised rules. Currently, Nvidia is relying on these chips to maintain its market share in China after the tightening of U.S. AI chip ban regulations.

U.S. Ban on Export of AI Chips to China

In October 2023, the U.S. Department of Commerce announced several restrictions regarding the sale of more advanced artificial intelligence chips to China. They aimed to address loopholes that emerged after 2022’s restrictions on AI chip exports came into effect.

These constraints prevented the shipment of major Nvidia AI chip products, including its advanced A800 and H800 AI chips. The A800 and H800 were introduced as alternatives for Chinese customers in November 2022, about a month after the U.S. government first imposed restrictions on exporting advanced microchips and equipment to China.

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