Highlights
- Nvidia’s Strategic Response: Nvidia plans to launch a new AI chip for China, priced between $6,500 and $8,000, to comply with U.S. export restrictions that banned its H20 model.
- Technical Adjustments: The new chip, based on the RTX Pro 6000D, will use GDDR7 memory and omit advanced CoWoS packaging to meet export control limits.
- Market Impact: Nvidia’s market share in China has declined from 95% to 50% due to U.S. export curbs, with Huawei’s Ascend 910B chip gaining traction as an alternative.
- Financial Repercussions: The H20 ban led Nvidia to write off $5.5 billion in inventory and forgo $15 billion in potential sales.
- Ongoing Developments: Nvidia is also developing another Blackwell-based chip for China, expected to begin production as early as September.
Nvidia Unveils Cost-Effective AI Chip for China Amid U.S. Export Restrictions
In response to stringent U.S. export controls, Nvidia is set to introduce a new artificial intelligence (AI) chip tailored for the Chinese market. This move comes after the U.S. government imposed restrictions on Nvidia’s H20 model, effectively barring its sale in China.
A Strategic Pivot
The forthcoming chip, anticipated to enter mass production by June, is part of Nvidia’s latest Blackwell architecture. Priced between $6,500 and $8,000, it offers a more affordable alternative to the H20, which was sold for $10,000 to $12,000. The reduced cost reflects its adjusted specifications, designed to comply with U.S. export regulations.
Built upon the RTX Pro 6000D, a server-class graphics processor, the new chip utilizes GDDR7 memory instead of the more advanced high-bandwidth memory. Additionally, it forgoes Taiwan Semiconductor Manufacturing Co.’s advanced Chip-on-Wafer-on-Substrate (CoWoS) packaging technology.
These modifications ensure the chip remains within the memory bandwidth cap of 1.7-1.8 terabytes per second imposed by U.S. export controls.
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Navigating Market Challenges
China has historically been a significant market for Nvidia, accounting for 13% of its sales in the past financial year. However, U.S. export restrictions have compelled Nvidia to adapt its product offerings.
The company initially considered developing a downgraded version of the H20 for China, but this plan was abandoned due to the limitations of the older Hopper architecture.
Nvidia’s CEO, Jensen Huang, has been vocal about the challenges posed by these restrictions. He noted that the company’s market share in China has plummeted from 95% before 2022 to 50% currently.
The H20 ban alone forced Nvidia to write off $5.5 billion in inventory and forgo $15 billion in potential sales.
Further Reading: Nvidia Adjusts H20 Chip for China to Comply With U.S. Export Rules
Competitive Landscape
As Nvidia grapples with export restrictions, Chinese tech giant Huawei is gaining ground with its Ascend 910B chip. Manufactured using SMIC’s 7nm process, the Ascend 910B is emerging as a viable alternative for Chinese customers seeking high-performance AI solutions.
Looking ahead, Nvidia is reportedly developing another Blackwell-based chip for the Chinese market, with production expected to commence as early as September.
While details about this variant remain scarce, it underscores Nvidia’s commitment to maintaining its presence in China despite regulatory hurdles.
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