Nvidia Launches New AI Chips Tailored for Chinese Market

Nvidia has commenced the sampling phase for its latest artificial intelligence (AI) chips specifically designed for the Chinese market.

The strategic manoeuvre aims to fortify the company’s stronghold in China, particularly in light of mounting export constraints imposed by the United States.

Nvidia’s CEO, Jensen Huang, revealed in an interview following the release of the company’s quarterly results that they are currently providing samples of two new AI chips to potential customers in China.

“We’re sampling it with customers now. Both of them comply with the regulation without a license. We’re looking forward to customer feedback on it. We’re expecting that we’re… going to go compete for business, and hopefully we can serve the market successfully,” Huang said.

Despite not disclosing specific chip names or clientele, Nvidia’s proactive approach underscores its commitment to address market challenges imposed by U.S. export policies.

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The decision to roll out tailored AI chips for China comes amidst reports from industry insiders, such as the chip industry newsletter SemiAnalysis, which previously hinted at the development of three chips – H20, L20, and L2 – specifically crafted for the Chinese market.

According to SemiAnalysis, while these chips incorporate Nvidia’s latest AI features, they have undergone modifications to adhere to new U.S. regulations. Notably, the H20 chip, anticipated as the most powerful among the trio, has recently become available for pre-orders, with pricing comparable to rival offerings from companies like Huawei.

However, the rollout of the H20 chip faced delays, attributed to integration challenges reported by server manufacturers late last year. Nvidia’s business in China encountered a notable setback following the expansion of U.S. export controls in October, leading to a significant decline in sales as shipments to the Chinese market halted.

For the fiscal fourth quarter ending on Jan. 28, Nvidia’s sales in China, including Hong Kong, amounted to $1.9 billion, constituting approximately 9% of total sales. This marked a stark decrease from the previous quarter, where sales in the region reached $4 billion, comprising 22% of total sales.

Despite the current market challenges, Huang remains optimistic about Nvidia’s prospects in China, hoping to regain market share once the business resumes normal operations.