Chip Photo:VCG

US chip giant Nvidia reportedly reached a $1 billion deal with Chinese tech giants for A800 processors, as US chipmakers ramp up sales of modified chips to China despite ongoing US efforts to suppress China's chip industry.

Experts said that these deals underscore the industry's challenges and the restrictions imposed on regular chip trade due to the US' decoupling strategy, aimed at curbing China's technological progress.

They also show the pressure faced by US chip companies and their concerted efforts to continue exporting to China, amid restrictions imposed by the US government, experts said.

Nvidia has received orders worth $1 billion from Baidu, ByteDance, Tencent and Alibaba for approximately 100,000 A800 processors, as reported by the Financial Times on Thursday, citing sources familiar with the matter. These orders are expected to be delivered this year. 

The A800 is a less-powerful version of Nvidia's cutting-edge model, after US officials asked the company to stop exporting its two top computing chips to China for work related to artificial intelligence (AI), according to media reports.

Other US chip companies are adjusting their AI chip product specifications to comply with US government restrictions while continuing to export to China.

Intel has made a modified version of its Gaudi 2 AI chips for the Chinese market. AMD said it sees an opportunity to develop an AI chip specifically for the Chinese market to comply with US export curbs, CNBC reported.

Despite challenges posed by the US government's efforts to decouple from China, these recent sales deals highlight the efforts of the US chip industry to bypass the US restrictions and ensure its presence in China's lucrative market, experts said.

The sales of modified chips reflect the chip giants' increasing efforts to hedge against the US government's misguided decoupling moves and their efforts to increase market share through various micro-measures to ensure exports to China, Chen Jia, an analyst on global strategy, told the Global Times on Thursday.

Such deals may experience significant growth in the future, as they comply with commercial rules and align with the interests of companies on both sides, Chen said.

The US government's decoupling policies, which have pushed chip manufacturers to the point where they have to produce downgraded versions to achieve normal exports, have also underscored the significant profit pressure on the US chip industry, Chen added.

For the quarter ended on July 1, Intel's revenue fell 15 percent year-on-year to $12.9 billion, marking the sixth consecutive quarter of declining sales, according to the company's second-quarter report. 

In July, executives from the three major US chip giants - Intel, Qualcomm and Nvidia - went to Washington to lobby against planned new curbs on chip exports to China, according to media reports.

It is hoped that the US government can see the difficulties and efforts of US companies and make adjustments to future policies, moving toward a more cooperative approach with China, Chen said.

The decoupling actions taken by the US have had significant negative effects on the healthy development of industrial chains and the cooperative mechanisms of international trade and the division of labor, Ma Jihua, a veteran telecom observer, told the Global Times.

This has had a wide-ranging impact on the global chip industry chain, and in the long run, it will cause US chip and semiconductor companies to lose opportunities in China, Ma said.

Nvidia's finance chief said in June that restrictions on exports of AI chips to China "would result in a permanent loss of opportunities for the US industry," CNN reported.

The continuous escalation of US sanctions on Chinese technology companies has greatly stimulated China's determination to achieve technological independence and autonomy, experts said.