Nvidia Corp. NVDA has reportedly given the green light for the use of Samsung Electronics Co Ltd.’s SSNLF fourth-generation high bandwidth memory (HBM3) chips in its AI processors for the Chinese market.
What Happened: This marks the first time that Nvidia has approved the use of Samsung’s HBM3 chips. However, the chips will initially be used in a less advanced Nvidia graphics processing unit (GPU), the H20, which is specifically designed for the Chinese market to comply with U.S. export controls, Reuters reported, citing three people briefed on the matter.
It remains unclear whether Nvidia will extend the use of Samsung’s HBM3 chips to its other AI processors. The chips are also yet to meet Nvidia’s standards for fifth-generation HBM3E chips, with testing ongoing.
According to the report, Samsung could start supplying HBM3 for Nvidia’s H20 processor as early as August. The H20 is the most advanced of the three GPUs Nvidia has developed for the Chinese market following the U.S. tightening export restrictions in 2023. These restrictions aim to impede supercomputing and AI advancements that could benefit the Chinese military.
The approval comes at a time when there is a significant demand for advanced GPUs due to the generative AI boom. Nvidia’s net income has surged to over $23.6 billion, reflecting the soaring demand for these chips.
With HBM3 chips also facing a shortage, Nvidia’s approval of Samsung’s chips is seen as a move to diversify its supplier base. This is especially important as the current leader in the field, SK Hynix, plans to increase its HBM3E production and reduce HBM3 production, according to the report.
Samsung and Nvidia did not immediately respond to Benzinga's request for comment.
Why It Matters: Nvidia’s approval of Samsung’s HBM3 chips is a significant development in the context of ongoing U.S. export restrictions on advanced semiconductors to China.
In response to these restrictions, Nvidia is reportedly developing new versions of its AI chips specifically for the Chinese market. Nvidia is working on a new AI chip, named “B20,” in collaboration with Inspur, a major distribution partner in China.
Additionally, the Chinese government has been urging its tech giants to reduce their reliance on foreign-made chips, including those from Nvidia. China has advised companies like Alibaba and Baidu to increase their purchase of domestic AI chips.
Despite U.S. restrictions, companies like Alphabet Inc.’s Google and Microsoft Corp. have been providing Chinese firms access to Nvidia’s AI chips through data centers outside China. This move highlights the ongoing demand for Nvidia’s technology in China.
Furthermore, Nvidia’s market value has been soaring, driven by the increasing demand for AI chips. A prominent tech investor predicted that Nvidia could achieve a market capitalization of nearly $50 trillion within the next decade.
Price Action: Nvidia’s stock closed at $122.59 on Tuesday, down 0.77% from the previous day. In after-hours trading, the stock further declined by 1.62%. Year to date, the stock has experienced an increase of 154.49%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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