NVIDIA's New China-Specific GPU is Here! A 'Chinese Solution' in Response to U.S. Export Restrictions?

TradingKey - Reports indicate that NVIDIA plans to launch a China-exclusive GPU based on the Blackwell architecture.

In response to the escalation of U.S. semiconductor export controls against China, NVIDIA (NASDAQ: NVDA) has recently announced plans to produce a China-specific GPU based on the Blackwell architecture, with mass production expected to begin as early as June 2025.

This decision stems from the U.S. Department of Commerce's April 2024 export ban on the H20 chip. After an unsuccessful attempt to develop a downgraded version of the H20, Nvidia has opted for technological adjustments utilizing the flexibility of the Blackwell architecture.

The new chip will use conventional GDDR7 memory instead of high-bandwidth HBM memory, resulting in significantly reduced performance compared to the previous H20 series. However, it is expected to be priced between 6,500 and 8,000—a decline of 30% to 50% from H20's price range of 10,000 to 12,000. This pricing strategy aims to attract medium-sized AI computing demands while circumventing export control limitations.

Nvidia's importance in the Chinese market cannot be overlooked; despite its sales share plummeting from 95% in 2022 to 50% last fiscal year, it still accounted for 13% of overall revenue.

Faced with competition from domestic AI chips like Huawei’s Ascend 910B—whose performance is now approaching that of the H20—Nvidia must navigate a dual challenge of technology degradation and market access.

Strategically, this tailored release represents Nvidia’s compromise amid geopolitical tensions. Jensen Huang noted that older architecture like Hopper used by the H20 can no longer accommodate further modifications. In contrast, Blackwell's adaptability makes it an optimal solution for both compliance and commercial interests.

Although performance may be limited, through cost control and technical compromises, Nvidia aims to maintain supply chain compliance while securing its strategic foothold in China's AI computing market.