Nvidia Offers China a Sanctions-Proof Chip

"HONG KONG -- Nvidia Corp. has begun offering an alternative to a high-end chip hit with U.S. export restrictions to customers in China, after the new rules threatened to cost the American company hundreds of millions of dollars in lost revenue.

Nvidia said the new graphics-processing chip, the A800, meets U.S. restrictions on chips that can be exported to China under new rules rolled out last month. The chip went into production in the third quarter, the company said.

The A800 replaces the A100, a chip widely used in servers and artificial-intelligence applications by China's tech giants including Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Baidu Inc. 

According to a memo Nvidia sent to its channel distributors last Thursday, the A800 has the same computational performance but a narrower interconnect bandwidth, the capacity of a chip to send and receive data from other chips, crucial for training large-scale AI models or building supercomputers.

"The A800 meets the U.S. government's clear test for reduced export control and cannot be programmed to exceed it," the company said. Nvidia's plans to offer the new chip were earlier reported by Reuters.

A Commerce Department spokesman said chips below the performance limits outlined in the latest U.S. restrictions were permitted for export to China, but said companies should conduct due diligence when transacting with Chinese entities.

Nvidia's new chip is a response to the Biden administration's sweeping new rules restricting exports of American chip technology to China, which U.S. officials say is aimed at slowing the country's military advance. The rules unveiled by the Commerce Department last month blocked an array of semiconductor technology from being shipped to China without a license, including advanced chip-manufacturing equipment and cutting-edge chips used for AI and supercomputing.

Those rules expanded on earlier restrictions placed on Nvidia's China exports of the A100.

In August, the company disclosed that export restrictions on its A100 chips would cost it $400 million in lost sales. About a quarter of Nvidia's $26.9 billion in revenue in its most recent fiscal year came from China and Hong Kong, the company said.

The company is preparing for high levels of demand for the new chip, according to people familiar with the matter, with the company set to start giving quotations in China as soon as Wednesday, the people said. Shipments are expected to start in the coming weeks and potential buyers include U.S. companies such as Dell Technologies Inc. for products they sell in China, these people said. A Dell spokesperson confirmed the company is evaluating Nvidia's A800 offering." [1]

1.  Business News: Nvidia Offers China a Sanctions-Proof Chip
Strumpf, Dan; Hao, Karen; Huang, Raffaele. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 09 Nov 2022: B.3.