Nvidia Plans Release of AI Chips for Chinese Market Amidst U.S. Export Restrictions

Graphics chip giant Nvidia is gearing up to launch a new line of artificial intelligence (AI) chips designed specifically for the Chinese market, chip industry newsletter SemiAnalysis reported. This move comes in response to recently tightened U.S. regulations on the sale of high-end AI chips to China.
NVIDIA CampusThe chips, named HGX H20, L20 PCIe, and L2 PCIe, are anticipated to showcase most of Nvidia’s cutting-edge features for AI applications. However, to comply with the new U.S. rules, some computing power measures have reportedly been scaled back, as indicated by the newsletter’s analysis of the chip’s specifications, Reuters news report said.

While there has been no official statement from Nvidia regarding the reported launch, shares of the company saw a 3.3 percent increase in midday trading following the news. The speculated announcement date for these chips is set for November 16, according to industry insiders.

It is noted that the recent U.S. export restrictions, announced last month, prevented Nvidia from selling two of its modified advanced AI chips — A800 and H800 — to China. The new rules impose limitations on the computing power that a chip can integrate into a small form factor and introduce a grey zone, requiring a license for certain shipments to China.

Wells Fargo analyst Aaron Rakers pointed out that while all three reported chips appear to stay within the absolute caps on computing power, one of them falls into the grey zone and will require a license. Rakers expressed concern about Nvidia’s aggressive efforts to navigate around U.S. restrictions, potentially prompting further regulatory actions.

Nvidia, which holds over 90 percent of China’s $7 billion AI chip market, faces challenges as it navigates the evolving regulatory landscape. Approximately a quarter of Nvidia’s data center chip revenue is derived from China, making the company susceptible to geopolitical tensions.

The impact of U.S. restrictions has not only affected Nvidia’s AI chips but also extended to one of its flagship gaming chips, the RTX 4090. Analysts speculate that these limitations could create opportunities for domestic Chinese firms, such as Huawei Technologies and Baidu, which reportedly placed a significant order for Huawei AI chips in preparation for potential supply chain disruptions from Nvidia.