Chinese Firms Turn To Nvidia Chips for AI Amid US Export Controls

Chinese companies adapt Nvidia gaming chips for AI development, countering US export controls on AI technology.

How is China circumventing the US AI chip export ban?

Following the Biden administration's October tightening of export controls on cutting-edge AI chips, Chinese enterprises are creatively modifying thousands of Nvidia gaming cards each month. These efforts, seen as a workaround for the lack of high-end processors in China, involve disassembling the cards and installing their core components on new circuit boards. However, these gamer-focused products, while powerful, fall short in the precision needed for training large language models with extensive data sets.

In December alone, over 4,000 Nvidia gaming cards were disassembled for this purpose, a significant increase from November's figures. The primary customers for these repurposed components are public enterprises and small AI labs that had not sufficiently stockpiled Nvidia server chips before the new US export controls.

Nvidia Navigates AI Chip Restrictions, Forecasts Robust Growth
Nvidia forecasts resilient growth despite AI chip export restrictions to China, buoyed by strong global demand and new product innovations.

Intellectual Property And Performance Challenges

This practice of modifying Nvidia's products raises concerns over potential intellectual property rights violations. Additionally, Nvidia's GeForce RTX 4090, a popular model for repurposing, has now been blocked from sale in China. To comply with the new export controls, Nvidia released a slower version of this card, the GeForce RTX 4090 D, in China, which is 5% slower than its international counterpart.

Industry experts caution that the performance gap between the modified 4090 D and the original 4090 could be significant, potentially rendering the slower version insufficient for extensive AI tasks.

ZOTAC GeForce 4090 D
In order to be eligible for export, the TPP rating ("Total Processing Performance") must not exceed 4,800 points.

Nvidia's Strategy And Chinese Market Response

Nvidia has developed three chips tailored for the Chinese market, aligning with US export controls. However, these chips are less powerful than previous versions and will not be widely available until March. Chinese customers have expressed dissatisfaction with the pricing of these new, less capable processors, which are set close to their more powerful banned counterparts.

Amid limited options for transitioning to China's developing chip ecosystem, some companies are resorting to these less expensive gaming chips. Despite uncertainties, there is cautious optimism that these repurposed chips will provide a temporary solution for AI development needs in China.


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