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.
Nvidia plans to introduce a new, lower-cost artificial intelligence chip specifically for the Chinese market, responding to export restrictions on its higher-end model.
Nvidia plans to begin mass production of its new AI chips in June, according to a May 26 Reuters report that cited sources familiar with the company’s strategy. These chips will power Nvidia’s latest generation of artificial intelligence hardware.
Nvidia plans to price the chip between $6,500 and $8,000, thanks to its reduced specifications and simpler manufacturing process. This makes it more affordable than the recently restricted H20 model, which previously sold for around $10,000 to $12,000.
A spokesperson for Nvidia informed Reuters that the company is continuing to assess its constrained set of options. The company stated, “We cannot access China’s $50 billion data center market until we finalize a new product design and obtain approval from the U.S. government.”
The chipmaker derived approximately 13% of its total revenue from China during the previous fiscal year, highlighting the country’s importance as a key market.
In April, the U.S. government notified Nvidia that it must obtain export licenses to sell its widely used H20 chips. Officials expressed concern that China might use or divert the technology to a supercomputer.
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 the company would continue optimizing its products to comply with regulations and maintain service to the Chinese market.
The company has now made its third attempt to develop chips that comply with Chinese regulations, specifically engineering the latest chip to meet 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
The company made this announcement just days before it plans to publish its quarterly earnings report 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, analysts on average expect Nvidia to report $43.4 billion in quarterly revenue—marking a 66% year-over-year increase—and $21.3 billion in adjusted net income.
Analysts at Oppenheimer stated that they still anticipate upside, even with the loss of H20 sales to China.
