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Nvidia to Launch Downgraded H20 AI Chip in China Amid Export Curbs

BusinessNvidia to Launch Downgraded H20 AI Chip in China Amid Export Curbs

Nvidia is preparing to introduce a downgraded version of its H20 artificial intelligence chip in China within the next two months, as it adapts to tightened U.S. export restrictions that have blocked the original model from the Chinese market. The company has informed key Chinese customers, including major cloud service providers, that the new chip version is expected to launch in July. The H20 had been Nvidia’s most advanced AI chip previously approved for sale in China, but recent policy changes by U.S. authorities have now made the original chip subject to export licensing requirements, effectively halting its distribution.

To navigate these restrictions, Nvidia has established revised technical standards for the modified chip. These adjustments involve substantial performance reductions, with one major downgrade being a significant cut in memory capacity. Sources indicate that the chip’s design could still allow downstream customers to adjust module configurations to tailor performance to specific needs. While the company has not commented publicly on the matter, it is evident that Nvidia is taking deliberate steps to maintain its business operations in China despite escalating geopolitical and regulatory challenges.

China remains a critical market for Nvidia, accounting for approximately $17 billion in revenue—or about 13% of the company’s total sales—for the fiscal year ending January 26. This underscores the strategic importance of continuing to serve Chinese clients, even with diminished product capabilities. The significance of this market was further highlighted by CEO Jensen Huang’s recent visit to Beijing, which occurred shortly after the U.S. government announced new export license requirements for the H20 chip. During his meetings with Chinese officials, Huang reiterated the company’s commitment to its presence in China.

The United States has restricted exports of Nvidia’s most powerful AI chips to China since 2022, citing concerns over potential military applications. The H20 was introduced following additional tightening of export rules in October 2023. In response, Chinese tech giants like Tencent, Alibaba, and ByteDance accelerated their purchases of the H20 amid growing demand from firms developing cost-effective AI models, such as DeepSeek. Nvidia had reportedly amassed $18 billion in H20 orders since January, illustrating the chip’s strong demand prior to the latest restrictions. The upcoming downgraded release represents Nvidia’s attempt to adapt to an evolving regulatory environment while continuing to serve its Chinese clientele.

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