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The Nvidia Corporation logo is seen during the annual Computex computer exhibition in Taipei, Taiwan, May 30, 2017.
Tyrone Siu | Reuters
BEIJING – American chip manufacturer Nvidia has reportedly found a way to sell high-quality chips to Chinese companies — while remaining compliant with U.S. regulations aimed at limiting China’s access to the technology.
China accounts for 20% to 25% of Nvidia’s revenue in its data center business, its largest unit.
Nvidia will deliver three new chips to domestic manufacturers in the coming days, Chinese financial media Cailian Press said on Thursday, citing sources.
The chips – called HGX H20, L20 PCle and L2 PCle – are based on Nvidia’s H100 chip, the report said.
The H100 and A100 artificial intelligence chips were the first to be hit last year by new US restrictions aimed at curbing sales to China. Nvidia said in a September 2022 filing that the US government would still allow it to develop the H100 in China.
In the short term, Chinese manufacturers have no better option and will continue to buy Nvidia’s chips while they look for replacements.
Bo Du
Managing Director, WestSummit Capital Management
Companies in China had subsequently switched to Nvidia’s H800 and A800 chips, but the US then imposed new restrictions on those sales last month.
The H20’s computing power is only about 50% of that of the A100, says Bo Du, managing director at WestSummit Capital Management and a former engineer in the chip industry.
That is “essentially saying goodbye to physical simulation,” he said in Mandarin, as translated by CNBC. While it is possible to use clusters of lower-power chips to support large model calculations, he said there is no ideal solution given the cost.
“In the short term, Chinese manufacturers have no better option and will continue to buy Nvidia’s chips while looking for replacements,” Du said, noting that some major Internet companies are widely developing domestically-made AI chips go buy.
Demand for artificial intelligence computing power has only increased as companies in China rush to develop local versions of OpenAI’s ChatGPT.
Navigating a fine line
The Financial Times also reported on the news of Nvidia’s new chips for the Chinese market, citing a document the chipmaker distributed to potential customers.
Nvidia declined to comment. The U.S. Department of Commerce and the Bureau of Industry and Security did not immediately respond to a CNBC request for comment.
All three of Nvidia’s new chips have operating metrics that fall outside the threshold of the U.S. restrictions, research firm SemiAnalysis said in an online post Thursday. The company runs a Substack technology newsletter that claims to have more than 64,000 subscribers.
“Nvidia is right on the cusp of peak performance and performance density with these new chips to get them through the new US regulations,” SemiAnalysis said.
Nomura analysts previously found that Nvidia’s Drive AGX Orin chip also did not meet all the criteria warranting a U.S. restriction on sales to China, meaning electric car companies in the country could still use the chip.
The US has said its focus is on limiting Chinese development of advanced technology for military use. President Joe Biden’s administration has also emphasized that the country is competing with China.
Domestic players are trying to develop solutions to US restrictions.
At the end of August, Huawei released a smartphone that, according to reviews, offers download speeds associated with 5G, thanks to an advanced semiconductor chip.
It is not clear whether older equipment or alternative purchasing processes were involved in the latest chip production.
– CNBC’s Arjun Kharpal contributed to this report.
