Nvidia to release three new AI chips for China market

SAN FRANCISCO – Nvidia plans to release new artificial intelligence (AI) chips aimed at the Chinese market less than a month after United States officials tightened the rules on selling high-end AI chips to China.

Chip industry newsletter SemiAnalysis said the Nvidia chips are called the HGX H20, L20 PCIe and L2 PCIe, and that Nvidia could announce them on Nov 16 at the earliest. Nvidia’s shares were up 3.3 per cent in midday trading after the report.

The chips include most of Nvidia’s newest features for AI work, but have had some of their computing power measures cut back to comply with new US rules, according to the newsletter’s analysis of the chip’s specifications.

Nvidia declined to comment when asked about the report. The White House and the Commerce Department did not immediately respond to requests for comment.

In October, the US AI chip giant, whose graphics processing units (GPUs) dominate the market for AI, said new export restrictions announced by Washington would block it from selling two of its modified advanced AI chips – the A800 and H800 – both of which were created for the Chinese market in 2022 to comply with previous export rules.

The new rules put a cap on how much computing power a chip can pack into a small size. The rules also include what analysts call a “grey zone” in which the chips might still be allowed to ship to China but will require a licence.

In a note to clients, Wells Fargo analyst Aaron Rakers wrote that all three of Nvidia’s reported chips appear to fall below the absolute caps on computing power, but one of them appears to be in the grey zone and will require a licence.

“While we would consider an introduction of these three new GPUs as a positive, we would expect investors to question whether (Nvidia) is being a bit too aggressive in its efforts to circumvent US restrictions and could ultimately just result in further (US government) moves going forward,” Mr Rakers wrote, noting that Nvidia gets about a quarter of its data centre chip revenue from China.

One of Nvidia’s top-of-the-line gaming chips, the RTX 4090, is also affected by the new rules, Nvidia has said.

On Oct 24, the firm said those curbs would take immediate effect, as US regulators had sped up an original deadline.

Nvidia has commanded more than 90 per cent share of China’s US$7 billion (S$9.5 billion) AI chip market, and analysts have said the US curbs are likely to create opportunities for domestic firms such as Huawei Technologies to make inroads.

Chinese Internet giant Baidu placed a sizeable order for Huawei AI chips in 2023, sources have said. One said Baidu had done so before the US curbs were announced, as it was preparing for a future when it would no longer be able to purchase from Nvidia.

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