Nvidia Unveils a Budget-Friendly AI Chip for China Amid Export Restrictions
Due to the tightening U.S. restrictions on exports, Nvidia is preparing to launch a low-cost AI chip for China. This latest development in Nvidia’s China strategy coincides with the country, home to the world’s largest population, embracing high-performance chips for its $50 billion data center industry, despite U.S. export restrictions.
As per a Reuters report, the chipmaker aims to start mass-producing the new chip in June, a source close to the matter reveals. The yet-to-be-released GPU built on Nvidia’s latest Blackwell architecture will cost $6,500 to $8,000, which is significantly cheaper than the H20 model, which was priced at about $10,000 to $12,000.
The cheap price results from simplified manufacturing and reduced specifications. Unlike the H20, the new chip isn’t going to use TSMC‘s advanced packaging technology and will use standard GDDR7 memory. This complexity makes it easier to manufacture.
An Nvidia spokesperson says the company is left with limited choices due to restrictions by the U.S. government. “We can’t access the Chinese data center market unless we come up with compliant product designs and government sign-offs,” said the spokesperson.
During the previous fiscal year, Nvidia got 13% of its total revenue from China, one of its critical markets. However, Nvidia’s dominance in China has changed dramatically since before 2022, when the firm owned 95% of the country’s market share — which is now down to around 50% after successive waves of export restrictions by the U.S.
Nvidia CEO Jensen Huang affirmed the firm’s faithfulness to the Chinese market by reiterating the company’s sustained efforts to come up with AI chips that are within U.S. regulatory limits, including the cap of 1.7 terabytes per second on bandwidth.
This is Nvidia’s third try at making a China-compliant chip. Despite the diminishing efficiency, industry experts believe that the new chip can help Nvidia stay competitive against local players like Huawei, which is ramping up production of its Ascend 910D AI chips.
According to Nori Chiou, investment director at White Oak Capital Partners, “Chinese firms may match Nvidia’s downgraded chips in performance within a year or two.” Nvidia is now gaining an edge because it can embed AI into its software, called CUDA.
The announcement comes just days before Nvidia is supposed to announce its quarterly earnings on May 28. Despite setbacks in China, analysts are bullish with an expected revenue of $43.4 billion, which is 66% higher than last year.
