Nvidia Forced to Leave China: Beijing Insists Tech Giants Adopt Domestic Semiconductor Solutions
In a significant turn of events, shipments of Nvidia's H20 and AMD's MI308 were halted by the Trump administration in April. This decision was later reversed in July, but not without a 15 percent cut of the revenues in exchange.
The Cyberspace Administration of China (CAC) was the authority that imposed the ban on Nvidia's GPU products within the Chinese market. The CAC ordered major Chinese tech companies, including ByteDance and Alibaba, to cease purchasing Nvidia's RTX Pro 6000D AI chips and cancel existing orders.
The CAC also issued letters discouraging the use of Nvidia's H20 accelerators for sensitive government workloads. Nvidia's CEO, Jensen Huang, expressed his frustration with Chinese regulators during a press conference in London.
In response to the ban, Chinese companies have been seeking alternatives. Huawei's Ascend 910C and CloudMatrix 384 are reported examples of domestic alternatives that outperform the H20. Unicom, a significant player in the Chinese tech scene, is said to have shopped with other Chinese chipmakers for its AI needs.
Chinese companies were reportedly lining up to purchase tens of thousands of the Blackwell-based accelerators for inference or model fine-tuning. However, the US export rules mean Nvidia must limit the Blackwell GPU to approximately 581 teraFLOPS of FP4 and 1.4TB/s of memory bandwidth.
The Chinese government's decision to restrict imports of Nvidia hardware is in response to a growing number of domestic alternatives. Nvidia is counting on sales in the region for its Q3 forecasts, but the ban is unlikely to have a material impact on the company's financials moving forward.
Notably, Alibaba, with its reported 1.2 billion subscribers and membership in OpenStack's million-core club, has been affected by the ban. The company, along with ByteDance, has been ordered to suspend testing and cancel orders of Nvidia's RTX Pro 6000D Blackwell GPUs.
Nvidia awaits the publication of regulations to resume sales in China. Despite the challenges, the company continues to navigate the complexities of the global tech market, demonstrating resilience in the face of regulatory hurdles.
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