Nvidia Sells New AI Chips to China, but Not Behind Biden’s Back

Nvidia sells new AI chips on Chinese e-commerce platforms that go against US export norms

In order to continue selling its goods to clients in China while also adhering to new US export control restrictions, US graphics card giant Nvidia now sells new AI chips that are specifically made for the Chinese market. It's to maintain growth as the largest chip market in the world.

Highlighting that Nvidia sells new AI chips to China despite the Biden administration's call for "tech decoupling." Nvidia's A800 GPU chips are a replacement for the A100 chip, whose sale to Chinese customers is now prohibited by the US government. The existence of the new device was originally reported by Reuters, and it was later verified by the Santa Clara, California-based Nvidia. The chip-to-chip data transfer rate is 400 gigabytes (GB) per second, as opposed to the advanced A100's 600GB per second, according to the AI chips description. The two GPUs don't differ significantly from one another other from this.

To tighten restrictions on China's access to cutting-edge processors, Washington forbade Nvidia from selling the A100 and its more potent H100 data center GPU to Chinese clients without a permit in August.

The company's most recent offering demonstrates how Nvidia is attempting to strike a balance between its business objectives and Washington's strategic containment of China. About a quarter of Nvidia's total gross sales are made in this nation. The company previously stated that it expected the restriction to result in third-quarter revenue losses of around $400 million.

The South China Morning Post was informed by a chip distributor based in Beijing that it had already begun pushing the A800 to Chinese customers as a replacement for the A100, which was released in 2020.

An unnamed Taobao seller of Nvidia A800 claims to have 1,000 A800 GPUs in stock and is ready to ship them right away. He is based in Shenzhen.

According to a Reuters report, Nvidia is selling the A800 processor in China. "For customers in China, the Nvidia A800 GPU provides an additional option to the Nvidia A100 GPU that entered into production in the third quarter. The A800 passes the unambiguous US government test for lowered export constraints and cannot be configured to do so", said Reuters.

In providing the chips that drive China's advancement in artificial intelligence (AI), data analysis, and high-speed computing, Nvidia has played a crucial role. As a result, the US ban severely hindered China's ability to create sophisticated AI models, which are trained on potent processors from American manufacturers like Intel and Advanced Micro Devices as well as GPUs from Nvidia.

The two cutting-edge processors are part of Nvidia's data center division, which saw sales of US$3.8 billion and year-over-year growth of 61% in the three months ending in June 2022.

According to the founder and CEO of the company, Jensen Huang, China has developed into a "very substantial market" for Nvidia as the country becomes a worldwide AI powerhouse with roughly one million companies claiming an affiliation with AI.

According to Xiang Ligang, an independent tech analyst, "Nvidia's latest action is expected, as no US chipmaker is ready to lose large Chinese market share, regardless of the pressure tactics used by American politicians."

"Local Chinese firms might also produce high-end products equivalent to Nvidia's A100. It's only a matter of time," he asserted, pointing out that a domestic startup has created a GPU chip with superior capabilities to Nvidia's, but it hasn't achieved mass production.

More US businesses, according to Xiang, are anticipated to act to lessen the effects of the Biden administration's restrictions and maintain their business relationships with Chinese clients.

Sales of semiconductor equipment on the Chinese mainland reached $29.62 billion in 2021, up 58 percent year over year, and represented 29% of the global semiconductor equipment market, according to figures from industry group Semi.

One of the most significant categories of computing hardware is the graphics processing unit (GPU), which is frequently used in applications like graphics and video rendering, artificial intelligence, and content creation. According to research, Nvidia held a 95 percent market dominance in China's AI and supercomputing chip market before to the ban.

In a prior statement, Nvidia estimated that the export ban imposed by the Biden administration would cost the business $400 million in potential third-quarter sales to China. Next week, the business will present its quarterly results.