US chipmaker Nvidia intends to start mass producing an artificial intelligence (AI) chip it created for China in the second quarter of 2024 in order to comply with US export regulations, according to two people with knowledge of the situation.

Of the three processors Nvidia designed specifically for China to comply with regulations that were made public in October, the H20 is the most potent.

It was first supposed to launch in November of last year, but that plan was postponed. At the time, sources told Reuters that the delay was because server manufacturers were having trouble integrating the chip.

One of the individuals stated that Nvidia will only fulfil orders for large customers and that the company’s initial production capacity will be restricted.

Both sources were not identified because the information was private. Nvidia chose not to respond.

Previous reports, quoting sources, claimed Chinese businesses are testing domestic alternatives instead of purchasing the downgraded H20 because they are afraid the US may reimpose restrictions. Leading search engine Baidu switched from using Nvidia to Huawei Technologies for its AI chips last year, according to Reuters.

Nvidia also plans the L20 and L2, two other processors that adhere to the new regulations, in addition to the H20. The sale of any of the three has not yet been announced by the chipmaker.

It released an updated version of a sophisticated gaming chip in late December that complies with the new regulations.

After tighter export controls in the United States prevented it from shipping products, including its cutting-edge A800 and H800 AI chips, Nvidia is placing its bets on the chips to help maintain its market position in the nation.

November 2022 saw the introduction of the A800 and H800 as substitutes for Chinese consumers, approximately one month after the United States initially imposed export restrictions on sophisticated microchips and equipment to China.

Upon analysing the specifications of the H20, L20, and L2, SemiAnalysis found that while the chips retain most of Nvidia’s latest features for AI work, computing power has been reduced to comply with the new regulations.

(Adapted from MarketScreener.com)