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Chinese companies are turning to repurposed chips from standard computer gaming products to develop artificial intelligence tools, after Washington banned US exports of high-performance processors.
Thousands of Nvidia gaming graphics cards are being stripped of their core components in factories and workshops every month, before being installed on new circuit boards, according to two factory managers and two chip buyers familiar with the situation.
Reusing chips from cards designed to be inserted into consumer personal computer motherboards to improve gaming graphics is an alternative solution to address a shortage of high-end processors in China, industry experts said.
While Nvidia’s gamer-focused products have raw computing power, they are not capable of performing the high-precision calculations needed to train some large language models using larger data sets. Because interconnection speeds between chips are limited, it is also difficult to overcome this by assembling more chips into compute clusters.
“This is a desperate move by Chinese companies under export controls. Just like using a kitchen knife to create a work of art, it is doable, but the effect is suboptimal,” said Charlie Zhai, an analyst at research group 86 Research.
The Biden administration tightened export controls on cutting-edge AI chips in October, making it difficult for chip companies like Nvidia to sell high-performance semiconductors to China.
Demand for graphics processing units sourced from gaming cards has surged in the past month, according to people familiar with the situation. A factory manager said workers dismantled more than 4,000 Nvidia gaming cards in December, more than four times the number in November.
Customers for the reused components were mainly public institutions and small AI labs, which did not stock enough Nvidia server chips before new U.S. export controls took effect, according to plant managers.
They declined to reveal more details about their customers due to the sensitivity of the issue.
However, industry experts and analysts have warned that modifications to Nvidia’s products violate the company’s intellectual property rights, while the sale of some gaming cards to China could be blocked at any time.
Nvidia’s most powerful gaming graphics board, the GeForce RTX 4090, was one of the most popular models to be reused, but has now been banned from being sold to China, the company said.
To comply with the latest controls, Nvidia came out with a slower version of the banned cards last month, called the GeForce RTX 4090 D, which is 5 percent slower than versions sold outside China, according to the company.
One factory manager said the performance gap between modified versions of the 4090D and 4090 would be “more significant,” which could mean the slower version wasn’t powerful enough to train large language models. The manager said that a batch had been purchased for further verification.
“Deconstructing gaming cards is not a viable way to create compute clusters for data centers for AI,” Nvidia told the Financial Times, adding that gaming products are “designed, manufactured and marketed for individual gamers and consumers.”
Nvidia has developed three chips specifically designed for China to meet the region’s growing demand for artificial intelligence systems while complying with US export controls, enabling the company to maintain a foothold in one of its most important markets.
However, these chips are performing much weaker than those previously sold in China, and will not be widely available until March, according to three people familiar with the situation.
Chinese customers have also objected to the prices Nvidia hopes to set for these inferior processors, which are close to those of their more powerful banned counterparts, the three people said.
However, options for moving into the ecosystem of alternative chips under development in China are limited, prompting some companies to turn to Nvidia’s less expensive gaming chips.
“We don’t know if this reinvention will be successful, but we hope these machines will be usable, at least in the short term,” one buyer said.