Insiders revealed that the US tech giant Nvidia is planning to launch a downgraded version of the H20 artificial intelligence (AI) chip within the next two months to cope with a new round of export restrictions on the Chinese market. It is reported that several performance indicators of the chip will be significantly lower than the original version.
According to three sources who spoke to Reuters, Nvidia has informed major cloud service providers in China including Alibaba, Tencent, and ByteDance (TikTok’s parent company) about its plan to release the modified H20 chip in July.
The sources noted that in order to comply with US export regulations, Nvidia has made significant adjustments to the design of the H20 chip, including a noticeable reduction in memory capacity. One source disclosed that Nvidia has set new technical thresholds as development guidelines, while another indicated that some downstream customers may adjust certain performance parameters through module configurations.
Nvidia declined to comment on the matter and the US Department of Commerce has not responded to requests for comment.
According to Nvidia’s financial report, the Chinese market contributed approximately $17 billion in revenue to the company by the end of the fiscal year on January 26, 2025, accounting for about 13% of its total revenue.
Initially developed by Nvidia as a downgraded AI chip tailored for the Chinese market, the H20 faced a setback when the US informed Nvidia last month that the product still required an export license application, effectively prohibiting its sale. Consequently, Nvidia incurred a substantial loss of up to $5.5 billion as recorded in its first-quarter financial report.
Subsequently, Nvidia CEO Jensen Huang visited Beijing in mid-April. According to the Financial Times, during his visit, Huang met with leaders of Chinese tech companies to discuss designing new generation products to meet regulatory requirements of both the US and China.
Since 2022, the US government has gradually restricted the export of Nvidia’s advanced AI chips to China, citing concerns that they could be utilized for military purposes by the Chinese Communist Party.
Earlier this month, reports emerged that Nvidia is developing a new generation of AI chips designed specifically for the Chinese market to comply with the latest US restrictions. Samples of the new chip are expected to be released as early as June, possibly based on the company’s latest Blackwell architecture to strengthen its position in the Chinese AI market.
During the Milken Institute annual conference on Tuesday (May 7), Huang mentioned that if Nvidia is unable to continue supplying the Chinese market, it would miss out on a significant business opportunity.