U.S. chip giant Nvidia is set to launch a downgraded version of its H20 artificial intelligence chip in China within the next two months, following strict export restrictions by Washington on the original model. Sources familiar with the matter revealed that major Chinese customers, including top cloud computing firms, have been informed of the planned July release. The move is part of Nvidia’s strategy to maintain its foothold in the critical Chinese market amid tightening U.S. controls on advanced semiconductor exports.
The original H20 chip, once Nvidia’s most powerful AI product cleared for China, was recently halted from market circulation after U.S. authorities ruled it required an export license. In response, Nvidia developed new technical parameters that significantly reduce the chip’s capabilities, notably its memory capacity. There are also indications that downstream clients may alter module configurations to influence performance levels. However, both Nvidia and the U.S. Commerce Department have declined to comment on the development.
China remains a vital market for Nvidia, contributing $17 billion or 13% of the company’s revenue in its last fiscal year, showing the importance of Nvidia CEO Jensen Huang’s visit to Beijing last month, where he reiterated the company’s commitment to the Chinese market during high-level meetings, just days after the U.S. announced tighter controls on chip exports.
Since 2022, the U.S. has been restricting the export of Nvidia’s high-end chips over fears of their military application. The H20 was launched in October 2023 to navigate those restrictions, and major Chinese firms like Tencent, Alibaba, ByteDance, and AI startup DeepSeek have since made bulk purchases. Reports suggest Nvidia amassed $18 billion worth of H20 orders since January, indicating strong demand despite regulatory headwinds.