Nvidia To Make AI Chip for the Chinese Market

Nvidia is working on a custom version of an AI chip from its Blackwell series for the Chinese market amid the stringent US export controls, sources familiar with the matter told Reuters. The US chipmaker is also developing a special server for the new AI chips.

In March, Nvidia unveiled its Blackwell chip series, including the B200 model. The new chips will go into mass production later this year. The chip for the Chinese market is reportedly named B20, and Nvidia plans to launch and distribute it in partnership with Chinese technology conglomerate Inspur. The B200 model is especially noteworthy, being 30 times faster than Nvidia’s previous offerings for tasks like preparing answers for chatbot queries.

The US imposed stricter rules on semiconductor exports to China this year to prevent the Chinese military from harnessing advanced semiconductor technologies. The US export restrictions helped Chinese-based companies take some of Nvidia’s market share. Nvidia’s most advanced chip for the Chinese market, the H20, had a weak start, but sales skyrocketed after the company priced it below a comparable chip from Huawei.

Nvidia, which aims to produce a new AI chip every year, has developed three China-specific versions of its chips since the US export restrictions, but this marks the first time Nvidia will create a server for a specific market. Pairing the Chinese versions with a specially designed server allows the chip manufacturer to circumvent the US export rules and keep its market presence in China.

Nvidia’s sales in China fell from 26% the year before US sanctions took effect to 17% after the new rules were implemented. According to research group SemiAnalysis, Nvidia is expected to sell over 1 million H20 chips in China this year, translating into $12 billion worth of revenue.

The new approach to designing market-specific products helps Nvidia comply with stringent export controls while serving a global consumer base. However, the US is expected to increase the pressure on domestic and even companies outside the US regarding semiconductor-related exports.

Furthermore, Bloomberg reported that Biden’s administration is considering a measure dubbed the foreign direct product rule that would allow the US government to cease product sales abroad for products made using American technology.

Earlier this year, the Biden administration proposed a “know-your-customer” program that requires US cloud service providers to investigate whether foreign clients, particularly China, develop AI on their platforms.