Nvidia, the world’s largest company by value, is reportedly developing a new artificial intelligence (AI) chip based on its flagship product B200 for the China market.
The mass production of the new chip, which may be called B20, will commence later this year while shipments will start in the second quarter of next year, Reuters reported, citing sources familiar with the matter.
The report said Nvidia will work with Inspur, one of its distributors in mainland China. However, Inspur said it has not started any business and cooperation related to B20 as of now. It said the Reuters report is not true.
The Reuters report also said the B20 will be designed in a way to avoid breaking the United States’ export controls.
But it’s unclear whether Nvidia can really launch the B20 in the end, as Washington may strengthen its chip export ban.
Citing a research note published by Jefferies analysts, QZ.com said it’s highly likely that the H20 chip will be banned for sale to China when the US Commerce Department does the annual review of its export controls in October.
The report said the ban could happen in three ways: through a “product-specific ban, lowering the computing power cap, and/or putting a cap on memory capacity.”
Besides, it said the US may consider extending its export controls on chips sold to other Asian countries, such as Malaysia, Indonesia, and Thailand – or extending the controls to overseas Chinese companies, although these would be harder to implement.
The report came after the Wall Street Journal on July 2 exposed an underground network that is smuggling A100, which has been banned for sale to China since October 2022, to mainland China.
According to the report, some middlemen set up research institute centers in Southeast Asian countries such as Singapore to purchase A100 chips from the US. They pay overseas Chinese students to bring these chips to China when they return home for vacation.
In one case, a 26-year-old Chinese student successfully brought six A100 chips in his luggage to China and made US$100 for each of them.
The official selling price of A100 is about $10,000 while the chip is priced at about $22,500 in the gray market in China. Buyers of smuggled chips cannot use Nvidia’s warranty or maintenance services.
‘Castrated version’
In October 2022, the US Commerce Department’s Bureau of Industry and Security (BIS) banned the exports of the A100 and H100 chips to China. Last October, it blocked the shipments of the A800 and H200 and some other AI chips to China.
Nvidia then launched three AI chips, including the H20, L20 and L2, for the China market.
The single-chip performance of the H20, dubbed as the “castrated version” of H100, is about 15% that of the H100. But the product still sees strong demand from Alibaba, Tencent, Baidu and ByteDance.
The Financial Times estimated that Nvidia’s sales of H20 chips in China may reach one million units, or US$12 billion in value, this year.
Cailianpress.com, a Shanghai-based financial news website, said the first batch of H20 arrived in China in May and June while major Chinese technology firms are now testing them.
The website said Nvidia’s Compute Unified Device Architecture (CUDA) platform, which can expand the capabilities of graphic processing unit (GPU) acceleration, is so powerful that many Chinese users cannot resist.
Li Yali, a columnist of Guancha.cn, on Monday published an article with the title “Will Nvidia’s H20 be banned from being shipped to China?”
She says in the article that the H20 has an advantage in AI training and reasoning as its high-band-width (HBM) capacity is higher than that of the H100 and China-made AI chips.
She says banning the export of H20 to China does not serve the interests of either China or the US.
Pressure from US lawmakers
On May 9, US lawmakers introduced a bipartisan bill called Enhancing National Frameworks for Overseas Critical Exports Act, which aims to make it easier for the Biden administration to impose export controls on AI models. They said the bill can reduce the risk of US technology getting into the wrong hands.
The House Foreign Affairs Committee on May 22 voted overwhelmingly to advance the bill to the House of Representatives.
China’s foreign ministry spokesperson Lin Jian said on May 10 that linking trade and technology issues to politics and ideologies and turning them into tools or even pushing for decoupling and severing of supply chains will only disrupt normal trade and mutual investment between China and the US.
Read: China uses Nvidia chips via Azure, Google clouds
Follow Jeff Pao on X at @jeffpao3