A more affordable AI chip is reportedly being developed by Nvidia for release in the Chinese market, in response to U.S. export restrictions, according to Reuters.
A new, lower-cost artificial intelligence chip is expected to be introduced by Nvidia specifically for the Chinese market, following the imposition of export restrictions on its higher-end model.
Mass production of Nvidia’s new AI chips is scheduled to begin in June, according to a May 26 report by Reuters, which cited sources familiar with the company’s plans. These chips will be included in Nvidia’s latest generation of artificial intelligence hardware.
The chip is expected to be priced between $6,500 and $8,000 due to its reduced specifications and simpler manufacturing process—making it more affordable than Nvidia’s recently restricted H20 model, which had been sold for approximately $10,000 to $12,000.
A spokesperson for Nvidia informed Reuters that the company is continuing to assess its constrained set of options. It was stated, “Until a new product design is finalized and approval is obtained from the U.S. government, access to China’s $50 billion data center market remains effectively blocked for us.”
China has been identified as a significant market for the chipmaker, contributing approximately 13% of its total revenue during the previous fiscal year.
In April, Nvidia was notified by the U.S. government that export licenses would be necessary for its widely used H20 chips. These restrictions were directed specifically at China, with officials expressing concerns that the technology “may be used in, or diverted to, a supercomputer in China.”
Nvidia’s market share in China has reportedly declined from 95% prior to 2022—when U.S. export restrictions initially affected its products—to the current level of 50%, according to company CEO Jensen Huang.
He stated during a televised interview in Taiwan last week that ongoing efforts would be made by the company to optimize products in compliance with regulations and to maintain service to the Chinese market.
This marks the third attempt by the company to develop chips that comply with Chinese regulations, with the latest chip being specifically engineered to adhere to the current U.S. bandwidth restriction of 1.7 terabytes per second.
Nvidia’s primary competitor, Huawei—based in Shenzhen—is currently in the process of testing and preparing for the launch of its latest AI chip, known as the Ascend 910D.
Anticipation Builds Ahead of Nvidia Earnings Report
This announcement has emerged just days ahead of the company’s scheduled release of its quarterly earnings report, which is set to be published on May 28.
The stock of the chip manufacturer closed last week with a decline of approximately 3%, bringing an end to a run of four consecutive weeks of gains.
According to Investopedia, Nvidia is expected by analysts, on average, to report quarterly revenue totaling $43.4 billion—representing a 66% year-over-year increase—and an adjusted net income of $21.3 billion.
It was stated by analysts at Oppenheimer that “upside is still anticipated … even with the loss of H20 sales to China.”
