China reportedly prohibiting Nvidia H20 chips due to new green rules

A new report says that China is restricting Nvidia H20 AI chips due to new green environmental rules. The Chinese government believes that the U.S. chipmaker cannot meet the latest guidelines, which are important for the data centers.

The story began after NDRC published new standards for data centers. It stands for National Development and Reform Commission and acts as an agency responsible for developing and implementing strategies for national, economic, and social growth.

Financial Times reveals that NDRC introduced some new energy-efficiency rules that can strictly restrict companies in China from buying Nvidia H20 AI chips.

As per these guidelines, Chinese firms should use processors and AI parts that can comply with green standards when developing or expanding data centers.

While the new environment-based green rules have yet to come into action, they have become a threat to Nvidia chip sales in China. The company was already facing challenges following Huawei’s growth in the Chinese AI chip industry.

On the other hand, the H20 processor doesn’t comply with new rules. Thus, the Chinese government could ban the respective foreign AI chip for native companies.

The report has just hit the surface, and Nvidia has already lost 5% of its stock in the market. If the report turns out to be true, the US OEM could face more consequences.

Chinese regulators have been encouraging companies like Alibaba, Tencent, and ByteDance to avoid buying Nvidia H20 chips for a while. Now, it has introduced a new way to trick Nvidia’s chip game in the market, promoting native firms like Huawei.

As for now, Nvidia doesn’t have to bother much on this matter, as the rules aren’t in action yet. Perhaps H20 chips can continue to sell in the Chinese market without any major impact till the new “green rules” go official.

The report adds that Nvidia is preparing a modified H20 version that can meet the latest Chinese ‘environmental’ standards and NDRC requirements. But if modified, the chip may serve even poor performance, which can impact the firm’s sales.

Simply put, Nvidia’s $17.1 billion business in China (13% of its total revenue) is now at risk. Apart from Nvidia, Intel HL328 and HL388 also don’t meet the new Chinese environmental criteria. Since the sale of these two Intel chips is low, the negative impact on their growth would be less than Nvidia.

China reportedly prohibiting Nvidia H20 chips due to new green rules (Image Credits: Nvidia)

(via)