Nvidia’s AI Chip Sales Dip in China

On January 8, according to international media reports, while Nvidia is preparing to roll out a new customized “crippled” AI chip for the Chinese market in compliance with U.S. export control policies, Chinese manufacturers are showing a lack of enthusiasm to purchase these chips.

Sources reveal that since November last year, large Chinese cloud computing companies including Alibaba Group and Tencent have been testing Nvidia’s specially provided chip samples. They have indicated to Nvidia that the number of chips they will order this year will be substantially less than the previously planned, now-banned Nvidia high-performance chips.

The U.S. government, on October 17, 2023, issued a new ban that further restricts the export of Nvidia’s high-performance AI chips. However, before the ban officially took effect on November 17, the U.S. government already mandated Nvidia to comply immediately with export restrictions for products that “achieve an overall performance of 4800 or higher and are designed or sold for data centers”. As a result, Nvidia announced an immediate halt to the shipments of the A100, A800, H100, H800, and L40S products.

Subsequently, industry insiders leaked information that Nvidia is developing the latest modified AI chips tailored for the Chinese market. These include the HGX H20, L20 PCIe, and L2 PCIe, all of which are based on the modified Nvidia H100 to meet the latest U.S. export control policies.

According to previously leaked specifications, the H20 is a “crippled” version of the H100 GPU, with a memory capacity of 96 GB, a high running speed of up to 4.0 Tb/s, a computational capacity of 296 TFLOPs, using the GH100 chip. However, this performance density (TFLOPs/Die size) is only 2.9. In comparison, the H100 comes equipped with 80GB HBM3 memory, a memory bandwidth of 3.4Tb/s, a compute capability of 1,979 TFLOPs, and a performance density of 19.4. This means that the “crippled” H20 chip’s AI computing power is less than 15% of the H100. Clearly, such performance cannot meet the needs of Chinese AI manufacturers.

In the short term, Nvidia’s modified AI chip has no significant advantage over some of the AI chips developed locally in China, which is making domestic chips more attractive to buyers. Insiders indicate that Alibaba and Tencent are shifting some of their advanced semiconductor orders to local companies and are increasingly relying on in-house developed chips. Baidu and ByteDance are reportedly doing the same.

Editor: Xin Zhi Xun – Lin Zi

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