$NVIDIA (NVDA.US)$ The rumor of the potential discontinuation of the Chinese special edition chip H20 has been circulating in the industry for the past few months, once again drawing attention to the fate of this chip. Recently, some dealers have informed reporters that they are no longer able to place orders for H20 chips, and certain terminal manufacturers have stated that they will no longer accept H20 orders from some domestic dealers.

Dealer Wang Yu told reporters that Nvidia stopped accepting H20 orders last month, but there was no explicit notification. "More accurately, we are awaiting recent news and it is estimated that production will not continue. Although there is no clear instruction, it is basically like that. It is possible that some customized customer needs can still be met."

Li Xiaolin, a representative of a terminal manufacturer, also told reporters, "We have to place orders for Nvidia through dealers. Recently, several dealers have stated that they will no longer accept H20 orders, while some have indicated that they have stock available for orders."

However, distributor Li Ming stated when asked about H20, "I can still accept orders."

Previously, reporters sent interview outlines to Nvidia China's email address to inquire about whether they were still accepting orders for H20, but did not receive a response. It is worth mentioning that Nvidia responded to the content of the report on the evening of September 20 with a "no comment" reply to the media.

Possibly due to the aforementioned news, Nvidia's stock price fluctuated last Friday, opening with a 2-point drop and closing with a 1.59% decrease, ending at $116.00.

NVIDIA seized the opportunity in the wave of large-scale models and consolidated its dominant position. In 2023, limited by policies, NVIDIA launched three special chip models based on H100 in China, among which H20 has the strongest performance.

Li Xiaolin revealed that NVIDIA started accepting H20 chip orders in February this year, officially shipping in April, and large-scale shipments in May.

However, reporters noticed that several practitioners, including Wang Yu, described the H20 chip as "chicken ribs".

Publicly available information shows that the NVIDIA H20 chip was launched to comply with US export restrictions and is an AI accelerator designed specifically for the Chinese market. H20 is based on NVIDIA's Hopper architecture and has 96GB of HBM3 memory, providing 4.0TB/s of memory bandwidth. In terms of computing power, H20 has an FP8 performance of 296 TFLOPS and an FP16 performance of 148 TFLOPS. Compared with H100, its GPU core count is reduced by 41% and its performance is reduced by 28%.

Multiple industry insiders also told reporters that the attention to the H20 chip is actually relatively low.

Zhang Na, who is close to multiple large model manufacturers, mentioned, "I feel that the market's attention to computing power leasing is relatively low, and then H20 is not so prominent." Li Xiaolin also told reporters, "The price of H20 is also not low, it sells for over one million. The large manufacturers have already stocked up, and smaller manufacturers may still have demand."

Even so, multiple industry insiders have also provided feedback that there are still large numbers of H20 chips arriving recently, exceeding the annual expectations.

According to a report by Sina Finance in early September, "chip experts said that it is estimated that ByteDance currently has over 0.1 million NVIDIA chips in hand; the additional orders for H20 chips in 2024 have reached 0.32-0.33 million, and 0.14-0.15 million have already been delivered."

Zhang Na said, "As far as I know, several manufacturers have recently received a large number of shipments, even more than expected. Before the New Year, the market generally expected H20 shipments to be about 0.4 million units this year, but it is estimated that the final shipment of 0.6-0.7 million units is also possible." Zhang Na said, "I don't know if this sudden change is because of the news about the H20 order deadline, and everyone wants to 'go all out.'"

With the surge in demand for AI computing power and policy factors, some of Nvidia's GPUs were once considered luxury goods due to high prices. In the interview, Li Xiaolin also mentioned Nvidia's "allocation" strategy based on the H20 chip.

Li Xiaolin said that due to the high demand for chips such as GB200 and A100, many major manufacturers have procurement needs. In addition to the limited production capacity of high-end chips, allocation is often necessary for procurement, with H20 being one of the common allocations. "It's hard to say whether some companies are purchasing H20 in large quantities because of allocations."

In July of this year, several media outlets reported that Jefferies Financial issued a report stating that the H20 chip may face a halt in sales, which could cause Nvidia a loss of 12 billion dollars. "The report believes that when the U.S. reviews its semiconductor export policy in October, H20 products may face a sales ban. The ban can take various forms, including bans on specific products, reducing chip computing power, or limiting their storage capacity."

It is worth noting that several industry chain professionals, including internet manufacturers, large model manufacturers, and chip suppliers, who spoke with the reporters, all explicitly stated that the rumors of H20 being discontinued have been around for a long time, and there is widespread concern about whether it will face a halt in sales in the short term.

Zhang Na said, "Several large and small hardware-related companies' friends have heard this news."

"It's been discussed in the industry for a long time, maybe there will be policies before the New Year, and Nvidia is still fighting for it," said Wang Yu.

"There have been rumors in the industry for a long time, but Nvidia has been putting pressure," said Li Ming.

Li Xiaolin further told reporters, 'Some dealers may not be accepting orders now because they are gambling to see whether H20 will stop selling in the near future. If it does, they will sell it at a higher price.'

In September and October of 2022 and 2023 respectively, the USA released policies regarding computational power chips, causing a huge stir at the time. Now, as the time for the policy release approaches, the fate of this special chip will soon be revealed.

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