Nvidia hid from Chinese customers until the very end that they would no longer receive H20 AI chips

Nvidia was notified by the US government on April 9 that it would need an export license to supply H20 accelerators to China, but it only passed on the information to some of its Chinese customers at the very last minute, according to Chinese sources involved in the brand’s supply chains to China.

Image source: NVIDIA

Formally, Nvidia made a public admission of its formal inability to supply H20 accelerators to China only yesterday, almost a week after notification from the American authorities. The reasons for its delays are not specified. Until recently, some of Nvidia’s large Chinese clients, who purchase its products in large quantities, remained in the dark.

According to available data, at the beginning of this year, Nvidia had orders for the H20 for Chinese customers worth a total of $18 billion. This is even more than the company’s entire revenue in China last year ($17 billion), and it supplies the local market not only with computing accelerators. Last year, China accounted for about 13% of Nvidia’s total revenue. The company was forced to admit this week that due to the ban on H20 supplies to China, it will have to write off $5.5 billion for the current quarter. H20 accelerators remained the most productive among Nvidia’s products that the company could legally supply to China since October 2023. Although it can formally continue supplies if it has an export license obtained from the US Department of Commerce, in practice, the chances of obtaining one are negligible.

Some experts believe that the actions of the US authorities will inadvertently benefit China’s Huawei Technologies, which develops its own computing accelerators for artificial intelligence systems. As more customers turn to Huawei after the ban on the import of Nvidia accelerators, the work on this should accelerate.