Nvidia Prepares B30 AI GPU for China Amid H20 Inventory Constraints and Export Restrictions

Nvidia has informed Chinese clients that the stock of its H20 HGX GPUs for artificial intelligence is limited and production will not resume, despite a recent policy shift by the Trump administration allowing exports of these processors to China. According to The Information, Nvidia plans to fulfill only existing orders using the current inventory and will not produce more H20 units. The company had previously halted H20 production due to U.S. export restrictions, leading to canceled orders and unused capacity at TSMC, its primary chip manufacturer. Nvidia also took a significant $4.5 billion write-down in the first quarter of 2023 related to unsold H20 inventory. TSMC, which operates at full capacity, has not received any new orders for the H20 from Nvidia. TSMC’s CEO, C.C. Wei, stated during a recent conference call that the company has not received any new signals regarding H20 production and cannot provide estimates for resuming it. While the easing of export rules is positive news for Nvidia, as China is a major market, resuming production of the H20 is unlikely given TSMC's current capacity allocation to other customers. Instead, reports from the Commercial Times suggest that Nvidia is preparing a new B30 GPU based on its latest Blackwell architecture. The B30 is reportedly 10% to 20% slower than the H20, which may help comply with U.S. export controls aimed at limiting the performance of GPUs sold to China. However, the B30 is expected to be significantly cheaper, with a price reduction of 30% to 40%, making it a cost-effective alternative for Chinese customers. Given that the Blackwell architecture is more efficient, the B30 could be smaller and less expensive than the H20 while still adhering to export control requirements. This would allow Nvidia to maintain or even improve its profit margins. Nvidia's decision to focus on a new GPU rather than resuming H20 production highlights the company's strategic approach to navigating the complex regulatory environment. The B30 is designed to offer competitive performance against local alternatives like those from Biren and Huawei while staying within legal boundaries. However, Nvidia has not officially confirmed the details of the B30, and much of the information remains speculative until further announcements. Industry insiders see this move as a pragmatic solution to the ongoing U.S.-China trade tensions. Nvidia, a leader in AI hardware, must balance the need to serve one of its largest markets while adhering to stringent export regulations. The company’s ability to innovate and offer tailored solutions for different regions underscores its adaptability and commitment to maintaining its leadership in the AI market. Nvidia's financial resilience, evident in its handling of the H20 write-down, further reinforces its position as a dominant player in the tech industry. Nvidia’s relationship with TSMC remains strong, despite the challenges posed by the H20 production halt. TSMC’s full utilization of its fabs and reallocation of resources indicate the semiconductor industry’s dynamic nature, where production decisions can quickly pivot to meet changing demands and regulations. For both companies, the next few months will be crucial as they navigate the evolving landscape of global technology trade.