Regulators recommend that Chinese developers abandon Nvidia accelerators in favor of Chinese analogues

So far, the actions of the Chinese authorities are more consistent with the concept of “recommendations,” but they are increasingly urging Chinese participants in the artificial intelligence systems market to purchase locally developed components, abandoning Nvidia accelerators, the range of which is already limited in China due to US sanctions.

Image source: NVIDIA

Bloomberg reported this behavior of Chinese officials the day before. At this stage, regulators in China are trying not to put too much pressure on local developers of artificial intelligence systems, as officials are trying to maintain a balance between encouraging import substitution and limiting Chinese companies in computing resources. Abandoning Nvidia accelerators without adequate Chinese alternatives will ultimately be detrimental to the Chinese AI industry.

Since the most modern series of Nvidia accelerators that can be legally purchased in China is the H20, the efforts of local officials are focused on migrating developers from these solutions from the American company towards components from the Chinese Cambricon and Huawei. At the same time, the Chinese authorities are aware that US sanctions may increase, and therefore local companies need to actively prepare for such a scenario in advance. Some Chinese ministries began distributing recommendations to limit the use of Nvidia accelerators several months ago, according to Bloomberg.

At the same time, officials turn a blind eye to those cases when the purchase of accelerators of Western origin by companies allows developers to build more productive and advanced data processing centers. Interestingly, Nvidia founder Jensen Huang yesterday announced his desire to best meet the needs of Chinese customers, while taking into account the requirements of American law. He stressed that Nvidia will do everything in its power to support Chinese customers. In the second quarter, Nvidia received about 12% of its total revenue from China and Hong Kong, the amount of $3.7 billion was more than 30% higher than last year for the comparable period. At the same time, the company’s management was forced to admit that American sanctions reduced Nvidia’s revenue in China.

In informal comments, Bloomberg sources explained that some Chinese companies are hastily purchasing Nvidia H20 accelerators, building up reserves in case of further worsening of American sanctions, while they are buying Chinese Huawei accelerators in order to formally follow the recommendations of local authorities.