Nvidia, a renowned U.S. chipmaker, has long been a key player in the AI market. Leveraging its expertise in advanced chip technology, Nvidia has consistently pushed the boundaries of artificial intelligence capabilities. However, yesterday two individuals with knowledge of the situation reported that recent developments in US export rules have led Nvidia to adapt its strategy for the Chinese market.
In response to these export restrictions, Nvidia has developed three China-focused chips, with the H20 being the most powerful among them. The H20 chip, initially scheduled for launch in November, experienced a delay. This postponement, as reported by Reuters, was due to server manufacturers facing challenges in integrating the chip.
The production of the H20 chip is now set to commence in the second quarter of 2024. However, the initial production volume is expected to be limited, focusing primarily on fulfilling orders for major customers. This decision aligns with Nvidia’s approach to navigate the complexities of the new market environment while adhering to U.S. export regulations.
Regarding the confidentiality of this development, both sources familiar with the matter chose to remain anonymous. Nvidia, maintaining its stance, declined to comment on these reports.
This strategic shift by Nvidia comes at a time when Chinese companies are exploring domestic alternatives to Nvidia’s products. A notable instance is Baidu, China’s leading search engine, which reportedly shifted to ordering AI chips from Huawei Technologies, moving away from its reliance on Nvidia. This move reflects a broader caution among Chinese companies, wary of potential further tightening of US restrictions.
In addition to the H20, Nvidia has planned two other chips that align with the new US export regulations — the L20 and L2. However, there has been no announcement regarding the sale of these chips so far.
Interestingly, in late December, Nvidia launched a modified version of an advanced gaming chip, tailored to comply with the new export rules. This release signifies Nvidia’s ongoing efforts to adapt its product offerings to different market needs.
The introduction of the H20, L20, and L2 chips marks Nvidia’s bet on preserving its market share in China. These chips incorporate most of Nvidia’s latest AI features but have reduced computing power to meet the regulatory requirements. The A800 and H800, previously introduced as alternatives for Chinese customers, were part of Nvidia’s initial response to the US export restrictions.
Nvidia’s introduction of the H20 chip and its counterparts reflects the company’s strategic adaptation to the evolving global landscape of technology trade, particularly in the realm of artificial intelligence. As these chips enter production, they represent a critical step for Nvidia in balancing market demands with regulatory compliance.
