JAKARTA Nvidia plans to release a downgrade version of the H20 artificial intelligence (AI) chip specifically for the Chinese market in the next two months. This step was taken following the ban on exports from the United States government against the original H20 model.
According to two sources, the US chipmaker has notified their main customers in China including a leading cloud service provider that a modified version of H20 will launch in July.
This move is Nvidia's latest strategy to maintain its presence in one of its most important markets, amid Washington's increasingly intensifying efforts to limit China's access to advanced semiconductor technology.
H20 was previously the most powerful AI chip still allowed to be sold to China. However, its sales stalled after US authorities informed Nvidia last month that the chip now requires a special export license.
In response, Nvidia is now developing new technical specifications that will form a downgrade version of the chip design. According to one source, this modified version will experience a significant decline in memory capacity side which is a key component in AI performance.
Another source said that end subscribers in China may still be able to adjust the chip module configuration to set its performance level back to a limited extent.
When asked for a response, Nvidia declined to comment. The US Department of Commerce has also not responded to requests for comment from the media.
China itself contributed revenue of 17 billion US dollars or about 13% of Nvidia's total sales in the fiscal year ending January 26. This confirms the importance of the Chinese market in the company's global strategy.
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Highlighting this, Nvidia CEO Jensen Huang even paid a visit to Beijing last month just days after the US announced a new export license policy for the H20 chip. In a meeting with Chinese officials, Huang emphasized the importance of the Bamboo Curtain country's market for the future of his company.
The US first began limiting the export of Nvidia's advanced chips to China since 2022, citing concerns over the potential use of the technology for military purposes.
In response to the tightening of controls in October 2023, Nvidia also launched the H20 chip as an alternative that could still pass the restrictions. But now, the chip is also subject to the latest regulations, forcing Nvidia to re-innovate so that it can still serve demand in the Chinese market.
A number of tech giants such as Tencent, Alibaba, and ByteDance had increased orders for H20 chips earlier this year, as the need for efficient AI models increased in terms of costs including startup companies such as DeepSek.
With this modification, Nvidia hopes to continue to flow products to China while complying with export rules from the US government. However, can this downgrade version meet market performance expectations? The answer remains to be awaited until its launch in the coming months.
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