Rumors have been circulating that NVIDIA has stopped taking orders for its H20 chips customized for China since August. Now, according to the latest report by Bloomberg, regulators in China have been advising companies against buying H20, as part of the country’s strategy to bolster its semiconductor industry and respond to further US sanctions.

As the initiative aims to boost the market share of domestic Chinese AI chip manufacturers, Huawei and Cambricon Technologies, which are leading AI processor makers in China, may turn out to be the major beneficiaries, Bloomberg suggests.

Beijing’s approach has been more of a guideline than a strict prohibition, as the authority still hopes to support its own AI startups, the report notes.

However, it is indicated that in recent months, several Chinese regulators, including the Ministry of Industry and Information Technology, did issue the so-called “window guidance”—informal instructions that lack legal authority—to minimize the use of NVIDIA.

It is worth noting that China has a thriving AI sector amid US restrictions. Major tech player like ByteDance and Alibaba are making significant investments, while numerous startups are vying for dominance. According to an earlier report by The Information, it is rumored that ByteDance has ordered over 200,000 NVIDIA H20 chips this year for AI model training, costing it over USD 2 billion.

In addition, there are six rising stars in the country’s development of large language models, which are crucial for generative AI, including 01.AI, Baichuan, Moonshot, MiniMax, Stepfun, and Zhipu, Bloomberg notes.

According to Bloomberg, some companies are disregarding the Chinese directive to avoid H20 chips, hastily acquiring more before a potential US sanction by the end of the year. However, they are also purchasing domestic Huawei chips to appease Beijing.

As early as in 2022, the US government prohibited NVIDIA from selling its most advanced AI processors to Chinese clients to curb Beijing’s technological progress. In response, the AI chip giant launched a series of AI chips tailored for the Chinese market, including H20, L20 and L2. According to a previous report by Wccftech, H20 GPU has 41% fewer Cores and 28% lower performance versus H100.

NVIDIA declined to comment to Bloomberg’s report, neither did China’s Ministry of Commerce, Ministry of Information and Technology, and Cyberspace Administration respond, Bloomberg notes.

In a separate statement, NVIDIA CEO Jensen Huang noted in an interview with Bloomberg Television that he is focused on serving customers in China while adhering to US government restrictions.

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(Photo credit: NVIDIA)

As the U.S. and its allies continue to impose technology restrictions on China’s semiconductor sector, Beijing has accelerated its efforts to develop homegrown alternatives. Chinese firms are aggressively pursuing advanced AI chip development, aiming to rival Nvidia, the global leader in AI semiconductors. A recent CNBC report highlighted seven Chinese companies to watch, including Huawei and Alibaba.

Huawei, the first of Nvidia’s Chinese challengers, is gaining attention with its new Ascend 910C AI chip, which is expected to compete with Nvidia’s H100.

Alibaba follows closely behind. After acquiring C-Sky Microsystems in 2018, the company integrated it with its in-house chip division to form T-Head. In 2019, T-Head launched its first AI inference chip, the Hanguang 800, which has since been deployed at scale in Alibaba’s hyperscale data centers.

Baidu ranks third with its self-developed AI chip, Kunlun. The chip has matured significantly, and in June, Baidu received a strategic investment from Beijing’s AI Industry Investment Fund, marking the first time a state-owned entity has invested in an AI chip firm, boosting Baidu’s growth prospects.

Biren Technology, in fourth, focuses on GPUs like Nvidia, with a software platform to build applications on top of its hardware. Biren’s Bili series of chips are designed for AI training in data centers. Last week, Biren registered for IPO guidance with the Shanghai Securities Regulatory Bureau, marking the start of its public listing journey.

Cambricon Technologies, ranked fifth, designs a wide range of semiconductors, from chips that train AI models to those running AI applications on devices. Known as China’s first AI chip stock, Cambricon has faced setbacks since being blacklisted by the U.S. in late 2022, with reports of large-scale layoffs last year.

Moore Threads, founded in 2020, is developing GPUs for training large AI models. Its data center product, MTT KUAE, integrates GPUs and is aimed at competing with Nvidia.

Enflame Technology, the seventh company on the list, positions itself as a domestic alternative to Nvidia, focusing on AI training chips for data centers. Enflame began IPO guidance on August 26, and is expected to list on the STAR Market alongside Biren either by the end of this year or early next year.

(Photo credit: Huawei)