Nvidia Develops New AI Chips to Avoid Curbs on China.

"Nvidia is working on a new lineup of artificial-intelligence chips customized for China as the semiconductor giant tries to maintain access to a huge market while adjusting to shifting U.S. regulations.

After U.S. restrictions cut off chips that Nvidia had previously developed for the market, the company told distributors in China early this past week that three new chips could become available as soon as the end of this year, according to people briefed on the matter.

The new chips comply with U.S. rules that prevented Nvidia from shipping more advanced semiconductors to the country without a license, according to performance specifications sent to distributors.

It would be the second time Nvidia has marketed versions of its AI chips for China after U.S.-imposed restrictions. In response to an earlier round of curbs last year, Nvidia released versions of its top-of-the-line A100 and H100 AI chips for China, dubbed the A800 and H800. Those chips were tweaked so they fell below performance and data-transfer thresholds that would have required an export license.

Nvidia is set to send samples of the new chips to potential buyers for testing in the coming weeks, according to people familiar with the matter. Distributors have been asked to gauge interest among customers, and those who previously placed orders for now-banned chips will get priority, the people said.

The U.S. is clamping down on AI chip exports to China over concerns about their use in cyberwarfare, espionage and the country's military development. AI is increasingly central in the technological competition between the geopolitical rivals, with both sides focused on developing domestic AI chip designs and manufacturing.

The rise of AI systems such as OpenAI's ChatGPT has added urgency to calls for more controls on chips made by Nvidia that are essential in producing these systems. Nvidia's sales have skyrocketed this year amid seemingly insatiable demand for its products, sending its valuation above the $1 trillion level.

Nvidia had previously said new restrictions won't have a significant immediate financial impact on the company, although Chief Financial Officer Colette Kress said in June that in the long run, broad restrictions would lead to a "permanent loss of opportunities" for the U.S. chip industry.

The new chips may help Nvidia make up for more than $5 billion in orders that were put in jeopardy by the new rules. 

Nvidia had planned to rush out deliveries of chips during a grace period for the newest restrictions, but the Commerce Department, which oversees export controls, cut that period short and made the rules effective immediately late last month.

The new chips for China come in three configurations, called the H20, the L20 and the L2, according to the performance specifications sent to one distributor.

The H20 would be the most powerful of the three, and would fall short of processor performance thresholds that would require a U.S. export license, according to an analysis by Bernstein Research. The L20 and L2 would be lower-performance chips, and would be below a threshold on the amount of computational power for a given size of chip." [1]

1. EXCHANGE --- Nvidia Develops New AI Chips to Avoid Curbs on China. Huang, Raffaele; Fitch, Asa.  Wall Street Journal, Eastern edition; New York, N.Y.. 11 Nov 2023: B.10.