NVIDIA to Sell AI Chips Worth 17 Trillion Won in China This Year... Circumventing US Export Controls

'H20', Expected to Sell 1 Million Units in China This Year
"Forecasted to Double Huawei AI Chip Sales"

NVIDIA is expected to sell AI semiconductors worth $12 billion (approximately 16.58 trillion KRW) in the Chinese market this year despite the United States' export controls on semiconductors to China. Although the U.S. is strengthening its restrictions on advanced technologies such as semiconductors and AI to curb China, NVIDIA is actively seeking ways to circumvent these sanctions to steadily generate sales in its key market, China.

[Image source=Yonhap News]

According to major foreign media on the 4th (local time), NVIDIA plans to ship more than one million units of the AI chip 'H20,' which bypasses U.S. semiconductor export controls to China, over the next few months.

The H20 is a product with reduced performance created by NVIDIA to avoid U.S. export regulations, targeting the Chinese market. The price of the H20 is around $12,000 to $13,000 per unit. If NVIDIA sells one million H20 units in China this year, it is expected to generate sales worth $12 billion. This exceeds the total sales NVIDIA made in China during the fiscal year ending January 2024, which was $10.3 billion.

The computing power of the H20 exported to China is reportedly about one-fifth that of NVIDIA's flagship AI chip, the 'H100.' However, since the U.S. implemented semiconductor export controls to China in October 2022, making it impossible for China to obtain advanced semiconductors like the H100, demand within China for NVIDIA chips with reduced performance that circumvent U.S. sanctions has surged. According to semiconductor research and consulting firm Semi Analysis, the 'Ascend 910B' developed by Chinese company Huawei, which is a substitute for the H100 banned from export to China, is expected to sell 550,000 units in China this year, about half the volume of NVIDIA's H20.

Dealer Patel of Semi Analysis stated, "Although the H20's performance is lower than Huawei's 910B on paper, in reality, NVIDIA's chip leads due to its superior memory performance."

Chinese companies are also receiving some supply of NVIDIA AI chips banned from export through indirect channels. According to The Wall Street Journal (WSJ), more than 70 distributors in China advertise online that they sell NVIDIA chips restricted from export to China and supply dozens of units monthly. The New American Security Center analyzed that the number of chips flowing into China through such channels is estimated at 12,500 units annually.

Although NVIDIA is actively seeking ways to circumvent export restrictions to China, its sales proportion in China has significantly decreased in recent years. Before the U.S. export control measures were implemented, China accounted for more than 25% of NVIDIA's total sales, but this year it is expected to be around 10%. This decline is attributed not only to export restrictions to China but also to the explosive growth in demand for NVIDIA chips worldwide, including from U.S. big tech companies, driven by the AI boom.