- Added information on the start of H20 production
Update, January 8, 2024:
Nvidia will begin mass production of its China-focused AI chip, the H20, in the second quarter of 2024, according to unnamed sources cited by Reuters. According to the sources, “initial production volume will be limited, with Nvidia set to primarily fulfill orders for major customers.”
The launch was originally scheduled for November 2022, but was delayed due to server integration issues. The H20 is one of three chips Nvidia developed for China to comply with U.S. export restrictions.
Nvidia also plans to release two other chips, the L20 and L2, that comply with the new restrictions. This is the second time in just over a year that Nvidia has had to adjust its products for Chinese customers due to new U.S. regulations.
Some Chinese companies are reportedly reluctant to buy the downgraded H20 and are instead testing domestic alternatives from Huawei (see below).
Original article from January 7, 2024:
China’s cloud companies reportedly consider local alternatives over Nvidia’s downgraded AI chips
Nvidia faces pushback from Chinese cloud companies, including Alibaba Group and Tencent, over its lower-powered AI chips designed to comply with tightened US export rules, the WSJ reports.
These companies are reportedly ordering fewer chips than initially planned and are shifting orders to local alternatives, like Huawei’s Ascend 910B chips. Nvidia, which historically derives about a fifth of its revenue from China, is struggling to balance US regulatory demands and Chinese clients’ needs.
Analyst Frank Kung from tech-research firm TrendForce predicts that Chinese cloud companies will reduce their sourcing of high-end AI chips from Nvidia from 80% to 50%-60% within the next five years.
Nvidia’s latest H20 chips reportedly increase costs for Chinese customers because they need more to “simulate the processing power they got from Nvidia’s previous chips.”