Nvidia has developed a new server chip based on its Blackwell design that complies with US export control rules. Although this isn’t groundbreaking news, it has sparked excitement among Wall Street analysts. According to the Financial Times, Nvidia is projected to sell $12 billion worth of AI chips in China this year, including over 1 million H20 chips designed to meet US restrictions. This figure is nearly double the sales expected for Huawei’s competing product, Ascend 910B. Despite facing restrictions, Nvidia’s revenue from China, including Hong Kong, increased by over 50% compared to the same quarter last year, reaching $2.5 billion in the latest quarter. There are also rumors of Nvidia’s AI chips being smuggled into China, with an estimated 12,500 AI chips smuggled annually, while Nvidia sold over 2.6 million A100 and H100 chips globally last year.
According to a Reuters story, Nvidia is, or has developed, a new server chip based on its Blackwell design that doesn’t meet or exceed the US Department of Commerce’s Bureau of Industry and Security (BIS) US export controls rules.
That doesn’t seem like breakthrough news, since Nvidia has already done such a thing and is eminently capable of doing such things. But it got the rumor mill and Wall Street excited. Wall Street has a notoriously short memory, so it gets excited easily.
And according to the Financial Times, Nvidia is on track to sell $12 billion of artificial intelligence chips in China this year despite the US export controls, and will deliver more than 1 million new H20 chips, designed to comply with US restrictions on selling AI processors to Chinese customers.
According to references of SemiAnalysis estimates, the figure is speculated to be nearly double what Huawei is expected to sell for its China-made rival product, Ascend 910B. Most Chinese AI companies have built their AI models on Nvidia’s ecosystem, making a switch to Huawei’s infrastructure time-consuming and costly.
Each H20 chip is estimated to cost between $12,000 and $13,000, suggesting Nvidia could generate over $12 billion in sales, surpassing the $10.3 billion revenue from its entire China business in the previous financial year.
Nvidia’s finance chief, Colette Kress, reported a significant decline in revenue from its data center segment in China following the imposition of new export controls in October.
Before US export controls, it was estimated China accounted for more than a quarter of Nvidia’s revenue. Speculation is that if the H20 chip meets analysts’ expectations, China could account for about 10% of sales this year.
Analysts at Morgan Stanley and SemiAnalysis say the H20 chip is now shipping in volume and is popular among Chinese customers despite its lower performance than Nvidia’s US-sold chips.
Nvidia’s total revenue from China, including Hong Kong, saw a significant increase of over 50% compared to the same quarter last year, reaching $2.5 billion in the latest quarter, despite facing certain restrictions.
And there are rumors saying Nvidia is under scrutiny because of reports of its AI chips being smuggled into China.
According to Reuters, around 12,500 AI chips are estimated to be smuggled annually, while Nvidia sold over 2.6 million A100 and H100 chips globally last year.
Reporting on rumors is a lot easier than doing an actual investigation and research..