Nvidia Develops New AI Chip for China Amid U.S. Export Controls

Nvidia is developing a version of its new flagship AI chips for the Chinese market, designed to comply with current U.S. export controls, according to four sources familiar with the matter.

Blackwell Chip Series

In March, Nvidia unveiled its "Blackwell" chip series, scheduled for mass production later this year. The new processors feature two silicon squares, each the size of the company's previous offerings. Within this series, the B200 chip is 30 times faster than its predecessor in tasks like responding to chatbot queries.

Collaboration with Inspur

Nvidia plans to collaborate with Inspur, a major distributor partner in China, for the launch and distribution of the chip, tentatively named the "B20." Shipments of the "B20" are expected to begin in the second quarter of 2025, according to a separate source. The sources requested anonymity as Nvidia has not yet made a public announcement.

Market Reactions

Following the Reuters story, Nvidia's shares rose 1.4% to $119.67 in U.S. premarket trading. Nvidia declined to comment, and Inspur did not respond to requests for comment.

U.S. Export Controls

Washington tightened controls on semiconductor exports to China in 2023 to prevent advancements in supercomputing that could benefit China's military. In response, Nvidia has developed three chips specifically for the Chinese market. These restrictions have allowed Chinese companies like Huawei and Tencent-backed Enflame to gain a foothold in the domestic market for advanced AI processors.

Impact on Nvidia's Market Share

A chip from Nvidia's Blackwell series tailored for China would help the company counter these challenges. China accounted for about 17% of Nvidia's revenue in the year ending January, down from 26% two years earlier due to U.S. sanctions. Nvidia's most advanced chip for the Chinese market, the H20, initially had weak sales but is now growing rapidly. Nvidia is projected to sell over 1 million H20 chips in China this year, worth over $12 billion, according to SemiAnalysis.

Future Expectations

Expectations are high that the U.S. will maintain pressure on semiconductor-related export controls. The U.S. is urging the Netherlands and Japan to further restrict chipmaking equipment to China. The Biden administration is also considering measures to regulate the most advanced AI models, which are core to systems like ChatGPT. Additionally, a potential foreign direct product rule could allow the U.S. to stop a product from being sold if it was made using American technology, according to sources.