H20 Production Ceased, Domestic GPU Sector Surpasses One Trillion | Zhike
Author | Fan Liang, Ding Mao
Editor | Ding Mao
On August 22, the domestic computing power sector witnessed a significant surge.
At the index level, the Wind GPU Index rose by 9.87%. Among them, Cambricon Technologies Corporation Limited soared by 20%, with its stock price hitting a new high and its market value exceeding 500 billion yuan; the stock price of Hygon Information Technology Co., Ltd. also climbed by 20%, reaching a new high, and its market value exceeded 400 billion yuan. If the process of Hygon Information's absorption and merger of Sugon Corporation is taken into account, Hygon Information's market value is also likely to break through to 500 billion yuan.
Therefore, if we calculate the combined market value of domestic listed companies with GPU - related businesses, the total market value of companies such as Cambricon, Hygon Information, Jingjia Microelectronics Co., Ltd., and Verisilicon Holdings Co., Ltd. officially exceeded the one - trillion - yuan mark on August 22.
The sharp rise was mainly catalyzed by the news of NVIDIA's H20 production halt.
On August 21 local time, the technology media The Information reported, citing people familiar with the matter, that NVIDIA had instructed key component suppliers such as South Korea's Samsung Electronics Co., Ltd. and Amkor Technology, Inc. in the United States to suspend production related to the H20 chips.
It is understood that Amkor Technology is responsible for the packaging of the H20 chips, while Samsung Electronics provides high - bandwidth memory chips. Currently, this news has been reposted by well - known media such as Reuters and Bloomberg, but NVIDIA, Samsung Electronics, and Amkor Technology have not made any positive responses.
In addition to the direct stimulus of the H20 production halt news, the latest upgrade of DeepSeek, which is beneficial to domestic AI chips, has further supported the market. On August 21, DeepSeek disclosed that DeepSeek - V3.1 uses the parameter precision of UE8M0 FP8 Scale. UE8M0 FP8 is designed for the upcoming next - generation domestic chips.
So, what are the possible reasons for NVIDIA's H20 production halt this time? And what impact will it have on domestic AI chips?
The Ins and Outs of the H20 Storm
The H20 is an artificial intelligence (AI) acceleration chip designed by NVIDIA specifically for the Chinese market to comply with US export controls. It was first exposed at the end of 2023 and started to be supplied in small quantities in 2024. It is reported that the H20 chip adopts NVIDIA's Hopper architecture and is a scaled - down version of the H100. While maintaining high memory bandwidth (4.0TB/s) and capacity (96GB HBM3), its performance is only 15% - 30% of that of the H100.
Although the performance of the H20 is significantly scaled down, since it is currently the most powerful NVIDIA chip available in the Chinese market, the market is very sensitive to the dynamics of the H20, and the H20 also accounts for a relatively large proportion of NVIDIA's revenue from China.
However, due to the continuously escalating US export restrictions, in fact, the sales of the H20 in China have been fraught with problems.
In April this year, the US government, citing "national security" as the reason, once banned NVIDIA from selling H20 chips to China, forcing NVIDIA to cancel orders from Chinese customers. The market estimated that this change would result in a cumulative loss of $13.5 billion in revenue for NVIDIA and a potential market loss of $50 billion.
A turning point came in July. On July 15, the US government restored the export license for the H20 to China. Subsequently, Jensen Huang, the CEO of NVIDIA, visited China to promote sales, and the market reignited its expectations for the H20. However, the latest development is that the H20 has officially obtained the export license, on the condition that 15% of its sales revenue from China be remitted to the US government.
Meanwhile, since the end of July, the Cyberspace Administration of China has interviewed NVIDIA in accordance with the Cybersecurity Law and the Data Security Law, requiring it to submit technical proof regarding the "vulnerability backdoor" of the H20 chip, which has caused an uproar in the market. So far, NVIDIA has been deeply involved in the "backdoor" storm in China.
On August 10, "Yuyuantan Tian", a media under CCTV, released a technical investigation report, pointing out that the US had a systematic consideration regarding the issue of creating "backdoors" in AI chips. The US side also specifically mentioned that if enterprises cooperate with the US government to install "backdoors", the US government can exclude them from export controls, including relaxing exports to "low - risk Chinese customers".
It also stated that according to the US design, functions such as license locking, tracking and positioning, usage monitoring, and usage restrictions can be achieved. It is believed that from any perspective, the H20 is not a safe, environmentally friendly, or advanced chip for China.
Although NVIDIA responded to the "vulnerability backdoor" issue afterwards, saying that "cybersecurity is of utmost importance to us. NVIDIA's chips do not have 'backdoors' and will not allow anyone to access or control the chips remotely."
But obviously, the market's concerns about the security of NVIDIA's H20 have not been dispelled. And the recent news of NVIDIA halting the production of the H20 has pushed this storm to a climax.
Market Speculations on the Reasons for the Production Halt
Currently, the market believes that the reasons for NVIDIA's H20 production halt may be as follows:
Firstly, it is a normal supply - chain management measure taken by NVIDIA based on market conditions.
Previously, the market reported that NVIDIA is shifting to the new - generation Blackwell architecture and plans to launch new chips, such as the B30 chip for the Chinese market, to better meet market demand and continue to comply with US export regulations.
Therefore, halting the production of the H20 can concentrate resources and production capacity on new - generation products, help deal with existing inventory, and free up production capacity for the production of new products.
Secondly, under the game between China and the US regarding AI computing power security, the cost - performance ratio of the H20 has significantly declined.
As mentioned above, since the end of July, NVIDIA has been deeply involved in the "backdoor" storm, which has raised concerns in the market about the security of NVIDIA's chips. In addition, the cost - performance ratio of the H20 has already been criticized by the industry. On August 18, Gene Munster, the co - founder of Deepwater Asset Management, revealed that NVIDIA may increase the price of the H20 by 18% to maintain its gross profit. In other words, NVIDIA plans to pass on the cost caused by the additional 15% fee imposed by Trump directly to Chinese customers. This undoubtedly means that the cost - performance ratio of NVIDIA's H20 will further decline.
With doubts about its security and a continuously declining cost - performance ratio, the feedback from domestic customers on the H20 may not have met NVIDIA's previous expectations, which has, to a certain extent, accelerated NVIDIA's supply - chain management.
While NVIDIA's H20 has been facing continuous problems, the rapid development of domestic AI chips may also have become an important factor that has impacted the performance of NVIDIA's H20 in China and led to its production halt.
Accelerated Replacement of Domestic AI Chips
While NVIDIA's H20 has been facing continuous problems, the commercialization and capitalization of domestic AI chips have continued to make breakthroughs recently.
At the beginning of June, the Agricultural Development Bank of China announced a large - scale GPU server procurement order worth hundreds of millions of yuan, and three domestic chip giants, Huawei, Cambricon, and Hygon, all won the bids. In the middle and late June, the IPO counseling status of Moore Threads changed to "counseling acceptance", getting closer to listing on the A - share market; on June 30, Muxi Integrated submitted its prospectus to the Shanghai Stock Exchange, planning to list on the Science and Technology Innovation Board. In August, Biren Technology released a general - purpose GPU chip in Shanghai, breaking the new global record for general - purpose GPU computing power.
According to the latest news, on August 21, DeepSeek officially released DeepSeek - V3.1. There are mainly three changes in this upgrade: (1) One model supports both the thinking mode and the non - thinking mode; (2) The thinking efficiency is higher, and answers can be given in a shorter time; (3) The Agent ability is stronger, and the performance of the new model in tool use and agent tasks has been greatly improved.
What really excites the market is that DeepSeek - V3.1 is expected to support FP8 precision and domestic chips.
DeepSeek pointed out in an article pushed on its official WeChat account that DeepSeek - V3.1 uses the parameter precision of UE8M0 FP8 Scale. At the same time, UE8M0 FP8 is designed for the upcoming next - generation domestic chips.
Figure: DeepSeek's Response to UE8M0 FP8 Data Source: DeepSeek official, compiled by 36Kr
According to CITIC Securities, compared with the FP16 format, FP8 can double the performance with the same chip area, and has lower power consumption and bandwidth requirements. In addition, DeepSeek said that the new precision format is designed for the upcoming next - generation domestic chips, indicating that in the future, domestic AI chips are expected to be more widely used in the training and inference based on the DeepSeek model.
Stimulated by the continuous positive news of domestic AI chips, the sentiment in the capital market has also been rapidly released.
In fact, since June this year, the domestic GPU sector has entered a new upward trend, and so far, the cumulative increase has exceeded 40%. Among them, leading companies such as Cambricon and Hygon Information have performed particularly well. Cambricon's increase since June has exceeded 100%, and Hygon Information's increase is close to 40%.
Figure: Trend Chart of the Wind GPU Index Data Source: Wind, compiled by 36Kr
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