Nvidia to launch cheaper Blackwell AI chip for China after U.S. export curbs, sources say

Nvidia plans to launch a new, lower-priced AI chipset for China based on its Blackwell architecture with mass production potentially starting in June, priced between $6,500 and $8,000, significantly below the restricted H20 model's $10,000-$12,000 price; this move comes as Nvidia's market share in China has fallen from 95% to 50% due to U.S. export restrictions, forcing it to tailor GPUs and compete with Huawei, and the company estimates losing $15 billion in sales due to the restrictions.

Analysis

Nvidia is preparing to launch a new, lower-priced AI chipset for the Chinese market, based on its latest Blackwell architecture, with mass production anticipated as early as June. This GPU, reportedly based on the RTX Pro 6000D, is expected to be priced between $6,500 and $8,000, significantly below the $10,000-$12,000 range of the recently restricted H20 model, reflecting weaker specifications such as the use of conventional GDDR7 memory instead of High Bandwidth Memory and the absence of TSMC's advanced CoWoS packaging. These design choices aim to comply with U.S. export restrictions, particularly the new limits on GPU memory bandwidth, with the new chip forecast by GF Securities to achieve approximately 1.7 terabytes per second, just within the estimated regulatory cap. This strategic pivot comes as Nvidia's market share in China has dramatically fallen from 95% before 2022 to 50% currently, ceding ground to competitors like Huawei and its Ascend 910B chip. The U.S. export curbs have already led Nvidia to write off $5.5 billion in inventory and forego $15 billion in sales. Despite these challenges, China represented 13% of Nvidia's sales in the past financial year, highlighting the market's continued importance, though a company spokesperson indicated Nvidia is still awaiting U.S. government approval for any new product design. A second Blackwell-architecture chip for China is also reportedly in development, targeting potential production as early as September.

Key Decisions for Investors

• Investors should closely monitor Nvidia's ability to secure U.S. government approval and effectively commercialize this new, lower-specification chip in China, considering the significant erosion of its market share to 50% and the substantial financial impact already incurred from export restrictions.
• The competitive landscape in China, particularly the advancements and market penetration of Huawei's Ascend 910B, presents a material risk to Nvidia's efforts to regain dominance, even with tailored products designed to meet export controls.
• Consider the ongoing geopolitical tensions and U.S. export controls as persistent headwinds that could further limit Nvidia's access and profitability in the Chinese market, which constituted 13% of its recent annual sales, and evaluate the potential for further market share losses or margin compression on compliant chips.