Nvidia Develops AI Chip for China Amid Tightened Export Controls
Nvidia is preparing a version of its latest flagship AI chips tailored for the China market. According to Reuters, it is designed to comply with U.S. export controls, according to four sources familiar with the matter.
In March, Nvidia unveiled its “Blackwell” chip series. These new chips are expected to enter mass production later this year. The series features the B200 chip, which boasts a performance 30 times faster than its predecessor for tasks such as chatbot responses.
For the Chinese market, Nvidia is developing a variant tentatively named the “B20,” in collaboration with Inspur, a major distributor partner in China. Shipments of the B20 are planned to commence in the second quarter of 2025, sources indicated.
Neither Nvidia nor Inspur has officially announced these plans. When contacted, a spokesperson for Nvidia declined to comment, and Inspur did not respond to requests for comment. Following the publication of the Reuters story, Nvidia’s shares rose by 1.4%, reaching $119.67 in U.S. premarket trading.
Impact of U.S. Export Controls
In 2023, the U.S. tightened its export controls on advanced semiconductors to China. The aim was to prevent advancements in supercomputing that could benefit China’s military capabilities. In response, Nvidia has developed three chips specifically for the Chinese market.
These stricter export controls have provided an opening for Chinese technology companies such as Huawei and startups like Tencent-backed Enflame to gain a foothold in the domestic market for advanced AI processors. A new chip from Nvidia’s Blackwell series designed for China could strengthen the U.S. firm’s position against these local competitors.
Nvidia’s Market Strategy in China
China accounted for around 17% of Nvidia’s revenue for the fiscal year ending January 2023. This is down from 26% two years earlier due to U.S. sanctions. Nvidia’s most advanced chip for the Chinese market, the H20, initially faced challenges when it launched this year.
Priced below a rival chip from Huawei, the H20 experienced slow initial sales. But it has seen rapid growth recently. Nvidia is projected to sell over 1 million H20 chips in China this year, valued at more than $12 billion, according to SemiAnalysis.
Future Outlook
The Biden administration is expected to maintain stringent semiconductor-related export controls. The U.S. is pushing the Netherlands and Japan to further restrict the sale of chipmaking equipment to China. Additionally, preliminary plans are in place to implement guardrails around the most advanced AI models, which are the core software of artificial intelligence systems like ChatGPT.
Global chip stocks experienced a downturn last week following reports that the Biden administration is considering the foreign direct product rule. This rule would allow the U.S. to block the sale of products made using American technology.
It’s clear that Nvidia’s strategy is to walk the tightrope of regulations while not losing its footing in the Chinese mainland.
Originally posted on OpenDataScience.com
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