Nvidia's China-Specific H20 Chip to Face Ban, $12B Loss

According to a report by QUARTZ, Jefferies has alerted clients that the United States is contemplating new trade restrictions that might prevent Nvidia (NVDA-US) from selling its HGX-H20 AI GPU, specifically designed for the Chinese market. These potential restrictions are part of the US government's efforts to limit China's access to advanced artificial intelligence technologies. If implemented, Nvidia could face a revenue loss of approximately $12 billion.

Nvidia's HGX-H20 GPU is designed to comply with US export regulations while still delivering substantial AI performance. The GPU features up to 296 INT8 TOPS/FP8 TFLOPS, 96 GB HBM3 memory, and a 4.0 TB/s memory bandwidth, making it competitive with entry-level AI processors.

US lawmakers are concerned that despite appearing less powerful on paper, the HGX-H20 outperforms its direct competitor, Huawei's Ascend 920 series AI processors, in practical applications due to its superior memory performance.

Jefferies' report suggests that during the US semiconductor export policy review in October, the HGX-H20 could face a sales ban. This ban could take various forms, including prohibitions on specific products, reductions in the chip's computational capabilities, or restrictions on its memory capacity.

Most Chinese AI companies have developed their ecosystems on Nvidia's CUDA platform, making the transition to other platforms like Huawei Ascend both costly and time-consuming. Despite being significantly slower than the fully-featured H100, the HGX-H20, fully compatible with Nvidia's CUDA platform, remains the preferred choice for many companies and applications.

Reports indicate that despite export controls, Chinese firms have still managed to obtain advanced Nvidia GPUs for AI and high-performance computing through intermediaries or by renting cloud servers from companies like Google (GOOGL-US) and Microsoft (MSFT-US).

The report also notes that the US might expand export restrictions to other Asian countries such as Malaysia, Indonesia, and Thailand, as well as to Chinese companies operating overseas. However, implementing and enforcing these expanded control measures would be complex and challenging.