Intel has responded to the high demand for advanced chips in mainland China by bringing its processor, the Gaudi2, to the market. This move comes as the country grapples with US export restrictions, leading to a thriving market for smuggled NVIDIA GPUs. At a press conference in Beijing, Intel presented the Gaudi2 processor as an alternative to NVIDIA's A100 GPU, widely used for training AI systems. Despite US export controls, Intel recognizes the importance of the Chinese market, with 27 percent of its 2022 revenue generated from China. NVIDIA has also tried to comply with restrictions by offering modified versions of its GPUs, but limited supplies have driven the demand for smuggled GPUs. Intel's Gaudi2 aims to provide Chinese companies with various hardware options and bolster their ability to deploy AI through cloud and smart-edge technologies. By partnering with Inspur Group, a major AI server manufacturer, Intel plans to build Gaudi2-powered machines tailored explicitly for the Chinese market.

China's AI ambitions face potential challenges as the US government considers restricting Chinese companies access to American cloud computing services. This move could impede the utilization of advanced AI chips by major players like Amazon Web Services and Microsoft for their Chinese clients. Additionally, there are reports of a potential expansion of the US export ban to include NVIDIA's A800 GPU. As China continues to push forward with its AI development projects, Intel's introduction of the Gaudi2 processor helps country's demand for advanced chips. Balancing export controls and technological requirements within this complex trade landscape remains a crucial task for both companies and governments involved in the Chinese AI industry.