Key Takeaways
- Nvidia is set to release a more affordable AI chip specifically for China.
- The new chip addresses US export rules that limited sales of its advanced models.
- Mass production is reportedly slated for June.
- This initiative aims to regain ground in the vital Chinese market.
Nvidia is gearing up to launch a new, lower-cost artificial intelligence chip for the Chinese market. This strategic move follows U.S. export restrictions that have impacted its sales of more advanced chips in the region.
Mass production of this new AI chip is anticipated to begin in June, according to Reuters, citing sources familiar with the plans. It will be part of Nvidia’s latest generation of AI technology.
The new chip is expected to be priced between $6,500 and $8,000. This is notably less than the $10,000 to $12,000 price tag of its H20 model, which recently faced export restrictions. The lower cost is attributed to simpler specifications and manufacturing.
An Nvidia spokesperson indicated that the company is still exploring its limited options. They told Reuters, “Until we settle on a new product design and receive approval from the US government, we are effectively foreclosed from China’s $50 billion data center market.”
China represents a significant portion of Nvidia’s business, accounting for 13% of its sales in the last financial year.
In April, the U.S. government informed Nvidia that its H20 chips required export licenses for China. The government cited concerns that the technology could be diverted for use in supercomputers in China.
Nvidia CEO Jensen Huang recently stated that the company’s market share in China has fallen dramatically from 95% before 2022, when U.S. restrictions first began, to about 50% currently.
“We will continue to make tremendous efforts to optimize compliant products and continue serving the Chinese market,” Huang remarked on Taiwanese TV. This new chip marks Nvidia’s third attempt to create a product that adheres to U.S. export rules.
The design of the upcoming chip aims to meet current U.S. bandwidth limits. In China, Nvidia faces competition from local companies like Shenzhen-based Huawei, which is developing its Ascend 910D AI chip.
This news surfaced just days before Nvidia is scheduled to release its quarterly earnings report. Despite challenges in China, analysts generally foresee strong financial results for the chipmaker.
As Oppenheimer analysts noted, “We see upside … despite the loss of H20 sales to China.”
