The giant American chip manufacturer Nvidia is said to have discovered a means to supply Chinese businesses with high-end chips while yet adhering to American regulations intended to limit China’s access to technology.

China makes up 20% to 25% of Nvidia’s income from its largest business, the data centre division.

According to Chinese financial media Cailian Press, which cited sources on Thursday, Nvidia is scheduled to ship three new chips to domestic manufacturers in the coming days.

According to the article, the chips, dubbed HGX H20, L20 PCle, and L2 PCle, are based on Nvidia’s H100 chip.

The first artificial intelligence chips to be subject to new U.S. regulations last year intended to limit shipments to China were the H100 and A100 chips.

In a September 2022 filing, Nvidia stated that the U.S. government will continue to permit it to work on the H100 in China.

Since they don’t currently have any better options, Chinese manufacturers will keep purchasing Nvidia processors while they look for alternatives.

Following that, Chinese companies began using Nvidia’s H800 and A800 processors; however, this month, the United States imposed additional limitations on those sales.

According to Bo Du, managing director at WestSummit Capital Management and a former chip industry engineer, the processing power of the H20 is only roughly 50% that of the A100.

According to him, that’s “basically saying goodbye to physical simulation.” He acknowledged that clusters of lower-power devices could be used to handle massive model simulations, but given the expense, he said there was no perfect option.

“In the near term, Chinese manufacturers have no better option and they will continue to buy Nvidia’s chips, while searching for replacements,” Du said, noting that some large internet companies have started to buy domestically-made AI chips at scale.

Since Chinese businesses are racing to produce localised versions of OpenAI’s ChatGPT, there has been an increase in demand for artificial intelligence computer capacity.

Nvidia’s new processors for the Chinese market were also announced by the Financial Times, which used a document that the chipmaker gave to prospective buyers as support.

Nvidia chose not to respond. When CNBC asked for comments, the U.S. Department of Commerce and the Bureau of Industry and Security did not immediately reply.

SemiAnalysis, a research group, stated in an online article on Thursday that the operating metrics of all three of Nvidia’s latest processors surpass the limits imposed by the United States. The business claims to have more than 64,000 subscribers to its Substack tech weekly.

“Nvidia is perfectly straddling the line on peak performance and performance density with these new chips to get them through the new US regulations,” SemiAnalysis said.

Prior research by Nomura analysts revealed that Nvidia’s Drive AGX Orin processor did not satisfy all the requirements for a US ban on sales to China, meaning Chinese electric vehicle manufacturers might continue to utilise the technology.

As stated by the U.S., the goal is to stop China from developing cutting-edge technology for military use. The administration of President Joe Biden has also underlined that China is a rival to the nation.

Players in the country are attempting to create ways around the limits set by the US.

Thanks to an improved semiconductor chip, Huawei debuted a smartphone in late August that reviews said offered download speeds comparable to 5G.

It’s unclear if the most recent chip manufacture entailed the use of outdated machinery or different buying procedures.

(Adapted from BusinessWorld.in)