Nvidia Is Developing Custom AI Chip for China, Navigating US Export Restrictions

Nvidia developing custom AI chip for Chinese market: Nvidia is working on a new version of its Blackwell AI chip series specifically for China, known as the B20 for now, in order to adhere to US export rules while still profiting from China’s computing market.

• The B20 could be a less powerful version of the B200 chip announced earlier this year, and Nvidia is partnering with Chinese firm Inspur on the launch, according to Reuters’ sources.
• In 2022, the US barred the sale and shipment of advanced AI chips to China, but Nvidia has been redesigning its AI chips to create altered versions that can still be sold to the Chinese market.
• US Commerce Secretary Gina Raimondo has expressed displeasure with Nvidia’s continued efforts to circumvent the rules, emphasizing that protecting national security matters more than short-term revenue.

Loopholes and workarounds in the US export rules: Despite the US restrictions, there are several ways Chinese buyers can still gain access to the restricted AI chips:

• Chinese companies can rent the hardware virtually through Microsoft and Google cloud servers.
• Some are reportedly smuggling the restricted chips into China via other countries where export rules don’t exist.
• Certain server products containing the advanced chips are still making their way to China.

Domestic chip development efforts in China: As the US ramps up its own chip manufacturing industry with funding from the CHIPS Act, Chinese firms are also developing their own AI chips:

• Companies like Huawei, Tencent’s Enflame, and ByteDance (TikTok’s parent company) are working on developing domestic AI chip offerings.
• ByteDance’s AI chip will reportedly be manufactured by TSMC, although the production timeline is unclear.

Analyzing deeper: Nvidia’s development of a custom AI chip for China highlights the complex geopolitical dynamics at play in the semiconductor industry. While the US government aims to restrict the flow of advanced technology to China, Nvidia and other tech giants are caught between adhering to these rules and maintaining access to the lucrative Chinese market. The various loopholes and workarounds being exploited by Chinese buyers underscore the challenges in effectively enforcing such export controls. As both the US and China pour resources into domestic chip production, the competition for technological supremacy in the AI field is likely to intensify, with potential implications for national security and the global balance of power. However, the details of Nvidia’s B20 chip and the extent to which it will enable China to advance its AI capabilities remain to be seen.