Nvidia offers samples of new AI chips in China amid U.S. export curbs

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22nd February 2024 – (Beijing) Nvidia, the leading graphics chip manufacturer, is currently providing customers with samples of its two latest artificial intelligence (AI) chips specifically designed for the Chinese market. The move comes as the company aims to defend its market dominance in China, which has been threatened by export restrictions imposed by the United States.

In an interview with Reuters on Wednesday following the release of Nvidia’s quarterly results, CEO Jensen Huang revealed the company’s strategy. “We’re sampling it with customers now. Both of them comply with the regulation without a license. We’re looking forward to customer feedback on it,” Huang stated. He also expressed optimism about competing for business and successfully serving the Chinese market.

Although Huang did not disclose the names of the chips or the customers involved, Nvidia has not yet responded to requests for further clarification on the matter.

According to the chip industry newsletter SemiAnalysis, Nvidia had plans to launch three chips – H20, L20, and L2 – specifically for the Chinese market. While these chips incorporate Nvidia’s latest AI features, their computing power has been reduced to adhere to the new US regulations, as analyzed by the newsletter.

Earlier this month, Reuters reported that Nvidia had started accepting pre-orders for the H20 chip, which is the most powerful among the three aimed at the Chinese market. Its distributors were pricing it at a level comparable to a competing product from Huawei.

Originally scheduled for a November release, the H20 chip faced delays due to integration challenges faced by server manufacturers, as reported by Reuters late last year.

Nvidia’s business in China has experienced setbacks since October when Washington expanded export control measures, including stricter restrictions on the shipment of advanced Nvidia chips to China.

Huang acknowledged the impact during the earnings call, saying, “This last quarter, our business significantly declined as we…stopped shipping in the marketplace (for China).” According to Reuters calculations based on the company’s results, Nvidia recorded sales of $1.9 billion in the China market, including Hong Kong, for the fiscal fourth quarter ending on 28th January. This accounted for approximately 9 per cent of total sales, a significant decline from the previous quarter when the company reported $4 billion in sales in the region, representing 22 per cent of total sales.

Huang anticipates a similar performance for the current quarter but remains hopeful about future prospects. “But after that, hopefully, we can go compete for our business and do our best, and we’ll see how it turns out,” he commented during the earnings call.