The US trade ban has hindered business between Chinese and American companies for years but Nvidia may have a workaround in place to cash in on China’s massive AI chip market. According to The Wall Street Journal, Nvidia is reportedly working on new AI chips specifically meant to circumvent the latest export restrictions in the US.
The US government warned Nvidia last year that it would restrict chip exports to China meant for supercomputers and artificial intelligence applications as they believe it could be used to support China’s military. Therefore, the American chipmaker was no longer able to sell some of its A100 and H100 chips. Hence, the company developed A800 and H800 chips for the Chinese market.
But even the new A800 and H800 chips were eventually banned from export as the US government updated its trade restrictions. These restrictions limit the amount of hardware power Nvidia is allowed to use for its AI chips meant for China. This also affects some other top-of-the-line Nvidia products such as the RTX 4090 consumer GPU.
Reports claim that Nvidia could lose up to $5 billion due to all the canceled chip orders with China.
Now the new chips Nvidia is working on are called HGX H20, L20, and L2. According to specifications obtained from distributors, the H20 is the most powerful out of the bunch, but it does not go beyond the computing power threshold set by the US government. This would mean that customers in China would require more of these low-powered chips for more demanding tasks.
On the other hand, Chinese companies already have their own backup plans in place in case they are no longer able to continue business with Nvidia. Industry giants including Huawei, Baidu, Xiaomi, Oppo, and others are developing their own semiconductors to power their devices.
Previous customers of Nvidia might opt to remain loyal to the company’s components, influenced by its established reputation and robust software, noted as one of the most reliable for AI development, as per The Journal. The source suggests that Nvidia could potentially unveil the new chips by November 16 and commence sales before the year concludes.