Nvidia (NVDA.O) is preparing to launch a downgraded version of its H20 artificial intelligence chip in China within the next two months, according to three sources familiar with the plan. The move comes in response to tightened U.S. export controls that restrict access to the original model.
The American chipmaker has informed major Chinese clients, including top cloud service providers, that it plans to release the modified H20 chip by July, two sources told Reuters.
This step marks Nvidia’s latest effort to remain active in one of its most vital markets despite Washington’s increasing restrictions on advanced semiconductor exports to China. The original H20, which had been Nvidia’s most advanced AI chip legally available for sale in China, was effectively banned last month after U.S. authorities stated it would now require an export license.
In response, Nvidia has developed new technical standards for the updated version of the chip. One source noted the changes would include significantly lower memory capacity, among other performance downgrades. Another source added that some customers might be able to reconfigure the chip modules to adjust performance levels within permitted limits.
Nvidia declined to comment on the matter, and the U.S. Commerce Department has not yet issued a response.
China contributed $17 billion to Nvidia’s revenue in the fiscal year ending January 26, representing 13% of total sales. The country’s importance was underscored by Nvidia CEO Jensen Huang’s visit to Beijing last month, shortly after the U.S. announced new export license requirements.
During his visit, Huang highlighted China’s strategic role as a major market for Nvidia.
Since 2022, the U.S. has imposed restrictions on the export of Nvidia’s most advanced chips to China due to concerns about potential military use. The H20 was developed following a tightening of those controls in October 2023.
Chinese tech giants such as Tencent (0700.HK), Alibaba (9988.HK), and ByteDance have ramped up orders of the H20 chip to meet surging demand for affordable AI solutions, especially among startups like DeepSeek, according to an earlier Reuters report.
As of last month, Nvidia had accumulated $18 billion in H20 orders since January.
