Nvidia Set to Unveil China-Centric AI Chip in Q2 2024, Insider Sources Reveal

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Beijing/Singapore, Jan 8 (Reuters) – U.S. chip giant Nvidia (NVDA.O) is gearing up for the mass production of its specialized artificial intelligence (AI) chip, the H20, designed exclusively for China, according to insider sources. The move comes as the company aims to comply with U.S. export regulations, with production set to commence in the second quarter of 2024.

Navigating Export Rules: Introducing the H20 Chip

Nvidia’s H20 chip, the most powerful among three chips tailored for the Chinese market, is expected to roll out in Q2 2024. Originally slated for a November 2023 launch, the release was delayed due to integration challenges faced by server manufacturers. Initial production volume is anticipated to be limited, with a focus on fulfilling orders for major customers.

Sources, requesting anonymity, revealed that Nvidia is strategically targeting key clients, while the company declined to comment on the confidential information. Reuters previously reported that Chinese companies exhibit reluctance towards the downgraded H20, exploring domestic alternatives amidst concerns about potential tightening of U.S. restrictions.

Market Dynamics and Alternatives: Baidu’s Shift and New Chip Offerings

Chinese search engine leader Baidu (9888.HK) reportedly shifted away from Nvidia, opting for AI chips from Huawei Technologies (HWT.UL) last year. In addition to the H20, Nvidia has plans for two other chips, the L20 and L2, designed to adhere to the latest restrictions; however, no sales announcements have been made thus far.

Nvidia, facing tightened U.S. export restrictions, is strategically relying on these chips to maintain its market presence in China. The A800 and H800 AI chips, introduced as alternatives in November 2022, were impacted by the initial restrictions. The H20, L20, and L2 retain Nvidia’s latest AI features but with reduced computing power to comply with the stringent rules, as analyzed by SemiAnalysis.

In late December, Nvidia launched a modified version of an advanced gaming chip, aligning with the updated regulations. The success of these China-focused chips will play a crucial role in determining Nvidia’s standing in the competitive Chinese market amid evolving geopolitical dynamics.

Reporting by Yelin Mo in Beijing and Fanny Potkin in Singapore; Editing by Brenda Goh and Christopher Cushing

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