Nvidia plans to launch a new AI chip on the Chinese market at a lower price than the recently limited H20 chip, with production possibly starting as early as June.
This was reported by Reuters news agency last weekend. The GPU is part of Nvidia’s current generation of Blackwell processors. It costs between $6,500 and $8,000, which is lower than the $10,000 to $12,000 that Nvidia was asking for the H20 chip.
The proposed chip will have less advanced specifications, be easier to manufacture, and use conventional GDDR7 memory instead of the high bandwidth memory (HBM) used in more advanced AI chips. This aligns with new US rules prohibiting the export of chips with HBM to China.
The new chip for China will also not use the advanced chip-on-wafer-on-substrate (CoWoS) packaging technology from Nvidia’s supplier, TSMC.
Nvidia wants to remain competitive in China
Nvidia’s development of this new chip is an attempt to remain competitive in the Chinese market despite US export restrictions. CEO Jensen Huang (photo) recently stated that China remains a valuable market for Nvidia and could potentially grow into a $50 billion revenue market in the coming years.
Nvidia was recently hit with a sales ban on the H20 chip. This lower-spec AI chip was developed specifically for China under export rules put in place during the Biden administration.
The Trump administration has since tightened the rules, effectively restricting the sale of all AI chips with advanced HBM technology to China.
Since 2022, Nvidia has steadily lost market share in China. According to Huang, its share fell from 95% to 50%. He recently called the US export restrictions a failure, arguing that they would only accelerate the development of domestic alternatives in China.
Nvidia faces stiff competition from China’s Huawei, which has significantly progressed in developing AI chips with its Ascend line. China accounted for nearly 13% of Nvidia’s revenue last year. Due to US restrictions, this is the third time Nvidia has customized a GPU specifically for the Chinese market.
After the ban on the H20 chip in April, Nvidia considered producing a watered-down version of that chip for China, but that plan was scrapped.
Sources told Reuters that Nvidia also plans to produce a second Blackwell chip for China in September. Meanwhile, Nvidia’s market share in China remains under pressure as more customers switch to chips from Huawei.