Intel Corporation is set to release two artificial intelligence (AI) chips with limited capabilities specifically for the Chinese market, adhering to the recent U.S. export controls that aim to curb the technological capabilities available to China. Scheduled for release in June and September, the HL-328 and HL-388 chips represent Intel's strategic pivot to comply with stringent international regulations while maintaining a presence in one of its largest markets.
The decision by Intel to modify its products comes in the wake of heightened U.S. sanctions on semiconductor exports, which have specifically targeted advanced AI technologies. According to a white paper released by Intel on April 12, and first reported by The Register, these China-specific chips are derived from Intel's latest Gaudi 3 product line but will feature reduced performance to align with U.S. regulatory demands.
The adjustments include limitations on processing power and other key capabilities, such as on-chip memory and high-bandwidth memory, ensuring that the chips remain within the legal thresholds set by the U.S. government. Despite these limitations, the chips maintain similar hardware features and interface standards as their full-capacity counterparts.
Nvidia, another major player in the semiconductor industry, has also responded to the new export rules by planning the release of three China-specific chips. One of these, the H20, is expected to start arriving in small batches in the first quarter of 2024, with a ramp-up in production anticipated by the second quarter, as reported by Reuters in January.
This move by major U.S. semiconductor companies reflects a broader industry trend of adapting product strategies to navigate the complex landscape of international trade laws and geopolitical tensions. The ongoing U.S.-China technology rivalry has led to significant challenges for companies like Intel and Nvidia, which have historically relied heavily on the Chinese market for revenue.
Recent developments have further complicated the situation. Chinese authorities have reportedly begun instructing major telecom operators to phase out foreign technology, including U.S. processors, from their networks by 2027. This directive is part of China's broader strategy to reduce dependence on foreign technology, directly impacting companies like Intel and Advanced Micro Devices, Inc.
Despite these challenges, Intel's stock has shown resilience, posting a 13% gain over the last 12 months. Investors interested in the semiconductor sector have options to gain exposure through ETFs like the First Trust Nasdaq Semiconductor ETF and the Invesco PHLX Semiconductor ETF.
