Nvidia to launch cheaper Blackwell AI chip for China after US 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 and priced between $6,500 and $8,000, significantly below the restricted H20 model's 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 adapt its products and potentially ceding ground to competitors like Huawei, with CEO Jensen Huang noting the company had to walk away from $15 billion in sales due to the H20 ban.

Analysis

Nvidia is preparing to launch a new, lower-priced artificial intelligence chipset for the Chinese market, reportedly based on its latest Blackwell architecture and priced between $6,500 and $8,000, a significant reduction from the recently restricted $10,000-$12,000 H20 model, with mass production potentially commencing in June. This strategic shift aims to address U.S. export restrictions that have severely impacted its operations in China—a market accounting for 13% of its sales last financial year—where its AI chip market share has plummeted from 95% pre-2022 to 50%, as stated by CEO Jensen Huang. The new GPU, potentially named 6000D or B40, will feature weaker specifications such as an RTX Pro 6000D base, conventional GDDR7 memory instead of HBM, and will not employ TSMC's advanced CoWoS packaging, aligning its memory bandwidth of approximately 1.7 terabytes per second with new U.S. export limits. This is Nvidia's third attempt to design a compliant chip for China, necessitated as the older Hopper architecture (used by H20) can no longer be modified under current restrictions. The H20 ban previously forced a $5.5 billion inventory write-off and $15 billion in lost sales. Nvidia faces intensified competition from Huawei's Ascend 910B, and a company spokesperson indicated ongoing evaluation of "limited" options, acknowledging being "effectively foreclosed from China’s $50 billion data center market" without a new, approved product. A second Blackwell-architecture chip for China is also reportedly in development for potential September production.

Key Decisions for Investors

• Investors should closely monitor Nvidia's ability to regain market share in China with these lower-spec, lower-priced chips against a backdrop of significant competition from Huawei and persistent U.S. export controls.
• The substantial market share loss to 50% and the financial impact of previous restrictions, including a $5.5 billion write-off and $15 billion in lost sales, underscore the challenges and potential margin compression from these adapted products.
• Given the "strongly negative" sentiment associated with these developments and ongoing regulatory uncertainty, consider the heightened risk profile for Nvidia's China-related revenue stream and the potential for further adjustments to its product strategy if U.S. government approval for new designs is not forthcoming.