Nvidia plans to release three new chips for China – analysts

By Stephen Nellis, Max A. Cherney and Fanny Potkin

SAN FRANCISCO (Reuters) -Nvidia plans to release new artificial intelligence chips aimed at the Chinese market less than a month after U.S. officials tightened the rules on selling high-end AI chips to China.

The chip industry newsletter SemiAnalysis said that the Nvidia (NASDAQ:) chips are called the HGX H20, L20 PCIe and L2 PCIe and that Nvidia could announce them on Nov. 16 at the earliest. Nvidia’s shares were up 3.3% in midday trading after the report.

The chips include most of Nvidia’s newest features for AI work, but have had some of their computing power measures cut back to comply with new U.S. rules, according to the newsletter’s analysis of the chip’s specifications.

Nvidia declined to comment when asked about the report. The White House and the Commerce Department did not immediately respond to requests for comment.

Last month, the U.S. AI chip giant, whose graphics processing units (GPUs) dominate the market for AI, said new export restrictions announced by Washington would block it from selling two of its modified advanced AI chips – the A800 and H800 – both of which were created for the Chinese market last year to comply with previous export rules.

The new rules put a cap on how much how much computing power a chip can pack into a small size. The rules also include what analysts call a “grey zone” in which the chips might still be allowed to ship to China but will require a license.

In a note to clients, Wells Fargo analyst Aaron Rakers wrote that all three of Nvidia’s reported chips appear to fall below the absolute caps on computing power, but one of them appears to be in the grey zone and will require a license.

“While we would consider an introduction of these three new GPUs as a positive, we would expect investors to question whether (Nvidia) is being a bit too aggressive in its efforts to circumvent U.S. restrictions and could ultimately just result in

further (U.S. government) moves going forward,” Rakers wrote, noting that Nvidia gets about a quarter of its data center chip revenue from China.

One of the Nvidia’s top-of-the-line gaming chips, the RTX 4090, is also affected by the new rules, Nvidia has said.

On Oct. 24, Nvidia said those curbs would take immediate effect, as U.S. regulators had sped up an original deadline.

Nvidia has commanded more than 90% share of China’s $7 billion AI chip market, and analysts have said the U.S. curbs are likely to create opportunities for domestic firms such as Huawei Technologies to make inroads.

Chinese internet giant Baidu (NASDAQ:) placed a sizeable order for Huawei AI chips this year, sources have said. One said Baidu had done so before the U.S. curbs were announced as it was preparing for a future when it would no longer be able to purchase from Nvidia.