Nvidia releases AI chips in China to circumvent US restrictions

According to four people who are familiar with the situation and leaked documents, Nvidia developed three new chips specifically for China to meet the growing demand in the region for artificial intelligence technologies while still complying with US Export Controls.

This is the second time, in less than a calendar year, that Silicon Valley’s Nvidia was forced to reconfigure their products for Chinese consumers by new US regulations. Nvidia wants to maintain its position in one of its biggest markets.

Nvidia prepares to launch new chips only weeks after the US limited sales to China high-performance processors that can be utilized to create AI systems. This is the latest salvo from the Biden administration in a tech war tit for tat between the two superpowers.

According to a document that the company distributed to potential customers, the three new Nvidiachips are the H20. L20. and L2.

These chips have a lower performance than the Nvidia chips that were previously sold in China. The new graphics processing units are expected to be competitive on the Chinese market.

In a Thursday note to its clients, SemiAnalysis analysts, a chip consulting firm, wrote that “Nvidia has perfectly balanced the line between peak performance and performance densities with these new processors to get them past the new US regulatory requirements.”

Nvidia didn’t immediately respond to our request for comment.

Jensen Huang is the co-founder of Nvidia and its CEO. Investors’ enthusiasm for the company’s dominant position in processors required to develop AI system drove its market value to over $1tn. The A100 and H100 chip are the most popular components among AI companies in the world. They want to build large language models. This is the technology behind chatbots like OpenAI’s ChatGPT.

In October 2022, as the US attempted to restrict China’s AI developments, the Biden administration banned sales for the A100 and the H100 GPUs. Nvidia responded by developing two alternative models, the A800 & H800. These models fell below the performance thresholds set by US sanctions. Last month, the US tightened their restrictions to include the A800 and H800.

As the US government accelerated the deadline for exporting, the latest restrictions went into effect immediately. This left Chinese tech groups reliant on obsolete and stockpiled chips to pursue their AI goals. Chinese tech groups were forced to use six-year-old technologies to develop AI systems by the rules.

Nvidia is also moving fast, despite its dominant position in the AI chip market of China. A person familiar with the matter said that the manufacturing process for its latest chips in China was simpler than the development of A800 and H800. Nvidia sent out samples of its chips to customers for testing, indicating that it is expecting mass production to start very soon.

Chinese companies are redoubling their efforts in the meantime to source AI chips domestically, reducing risk and accommodating the increasing AI chip ban. Huawei, Cambricon, and Biren are all prominent Chinese Nvidia rivals. In August, the founder of Chinese AI firm iFlytek claimed that Huawei’s Ascend AI chips could match Nvidia A100’s performance.

Nvidia’s Chinese competitors are restricted by geopolitical conflicts, which prevent them from manufacturing chips outside China. International sanctions also limit their access advanced chipmaking equipment, such as that of ASML, a Dutch-based supplier.