Nvidia to launch cheaper Blackwell AI chip for China after US export curbs, sources say

Nvidia plans to launch a new, cheaper Blackwell-architecture AI chip for China, priced between $6,500 and $8,000, with mass production potentially starting in June, after U.S. export restrictions hindered sales of its H20 model; the new GPU, based on the RTX Pro 6000D, will use conventional GDDR7 memory and is designed to comply with U.S. regulations by featuring lower memory bandwidth, addressing a vital need in the $50 billion Chinese data center market where Nvidia's market share has fallen to 50%.

Analysis

Nvidia is adapting to stringent U.S. export controls by preparing to launch a new, lower-specification Blackwell-architecture AI chip specifically for the Chinese market, with mass production anticipated as early as June. This chip, reportedly priced between $6,500 and $8,000, represents a significant price reduction compared to the recently restricted H20 model ($10,000-$12,000) and reflects its reduced capabilities, utilizing GDDR7 memory instead of High Bandwidth Memory and foregoing Taiwan Semiconductor Manufacturing Co.'s advanced CoWoS packaging. This strategic pivot aims to navigate U.S. regulations that cap GPU memory bandwidth—Jefferies estimates this cap at 1.7-1.8 terabytes per second, and the new chip is projected by GF Securities to operate around 1.7 terabytes per second, a substantial downgrade from the H20's 4 terabytes per second. The move underscores the critical importance of the $50 billion Chinese data center market, which constituted 13% of Nvidia's sales in the past financial year, despite the company's market share in China plummeting from 95% before 2022 to 50% currently amidst intensifying competition from Huawei. Previous restrictions have already resulted in a $5.5 billion inventory write-off and $15 billion in foregone sales for Nvidia, and the company acknowledges its "limited options" pending U.S. government approval for new designs. A second Blackwell-based chip for China is also reportedly in development for potential September production, indicating Nvidia's persistent efforts to maintain a presence in this key market despite the challenging geopolitical and regulatory landscape, which contributes to the moderately negative sentiment surrounding these developments.

Key Decisions for Investors

• Investors should closely monitor the U.S. government's approval process for Nvidia's new China-specific chips and their subsequent market penetration against domestic competitors like Huawei, as this will be crucial for mitigating further losses in the significant Chinese data center market.
• Evaluate the potential impact on Nvidia's gross margins and overall revenue growth from selling these lower-priced, less advanced AI chips in China, particularly given the reported $15 billion in prior lost sales due to restrictions.
• Factor in the ongoing geopolitical tensions and evolving U.S. export control landscape as significant risk factors that could further impede Nvidia's operations and market share in China, which has already declined to 50%, despite its adaptive product strategies.