Nvidia Plans Downgraded H20 Chip for China Amid US Export Restrictions
Nvidia is set to launch a downgraded version of its H20 artificial intelligence (AI) chip for China by July after US export restrictions on the standard model, according to a report by Reuters.
The move is designed to maintain Nvidia's foothold in China, which is one of its most valuable markets, against rising US attempts to restrict China's access to leading-edge semiconductor technology. Major Chinese customers, including major cloud computing companies, have been told about the forthcoming release by the company.
Impact of US Export Controls
The H20 chip, originally intended as one of Nvidia's most capable AI offerings for international markets, has been affected by recently imposed US export controls.
In October 2023, the US enacted tighter export restrictions, with the requirement for Nvidia to obtain an export license before selling the H20 to China, according to Reuters. Ever since then, Chinese tech majors such as Tencent, Alibaba, and ByteDance have placed increased orders driven by demand for affordable AI models.. Nvidia had accumulated $18 billion in H20 orders from Chinese companies by January 2024.
Modifications to the H20 Chip
According to Reuters, in response to the export restrictions, Nvidia has revised the technical specifications for the modified H20 chip. Key changes will include reduced memory capacity and performance downgrades.
But downstream clients may have the room to play around the chip's performance by reconfiguring it. Nvidia is then able to remain in business selling AI chip solutions to Chinese entities while still remaining compliant with US export control regulations.
Also read: India Moves to Fix AI Infrastructure Gap with National Datacentre Push
China’s Strategic Importance for Nvidia
China represents a critical market for Nvidia, accounting for $17 billion in revenue, or 13% of its total sales in the fiscal year ending January 26. Nvidia CEO Jensen Huang recently visited Beijing, underscoring the strategic significance of China for the company, even as export restrictions tighten.
Despite the challenges posed by US regulations, Nvidia’s commitment to the Chinese market remains evident as it seeks to balance compliance with continued business growth.
Ongoing US Export Restrictions on Advanced Chips
Since 2022, the US has imposed restrictions on Nvidia’s most advanced chips, citing concerns about potential military applications in China. These regulations have spurred Nvidia to develop new solutions, such as the downgraded H20, to meet the evolving demands of its Chinese customers while adhering to international policy requirements.
