NVIDIA Plans Downgraded AI Chip for China Amid Export Controls
The Facts
- NVIDIA is reportedly planning to release a downgraded version of its H20 chip to China in the next two months to circumvent export controls put in place by the Trump administration to restrict the sale of AI chips to China.
- The U.S. controls were implemented in April, resulting in NVIDIA facing potential losses of $5.5 billion. Soon after, Huawei, a Chinese competitor, unveiled several new chips to rival NVIDIA’s now hard-to-acquire products in China, including the Ascend 910D and Ascend 920.
- For NVIDIA, China represents a crucial market, contributing $17 billion in revenue or 13% of the company’s total sales in the fiscal year ending January 26, 2025, with global accumulated H20 orders reaching $18 billion since January.
Sources Split
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The Spin
Narrative A
Producing a viable alternative to the H20 is essential to ensure NVIDIA retains access to the Chinese market, which could possibly be worth as much as $50 billion in the coming years. Without such access, NVIDIA would be cut off from a considerable percentage of its revenue and forced to surrender a growing chunk of the global AI market to Chinese competitors, who could use that leverage to undermine the leading position of the U.S. company.
Narrative B
Despite NVIDIA’s best efforts, the damage is done. The export controls have handed over the growing Chinese market to domestic competitors, most notably Huawei, whose newly launched chips rival even NVIDIA’s H20 processor. NVIDIA’s rumored replacement for China may avoid American regulations, but its downgrades will mean it cannot compete with the likes of the Ascend 910D or Ascend 920.
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