Exclusive: Nvidia to launch cheaper Blackwell AI chip for China

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, in response to U.S. export restrictions that limit its ability to sell higher-performance chips like the H20. The new GPU, based on the RTX Pro 6000D and using GDDR7 memory, aims to address the $50 billion Chinese data center market, where Nvidia's market share has declined from 95% to 50% due to export curbs and competition from Huawei, potentially impacting future revenue streams.

Analysis

Nvidia is strategically responding to stringent U.S. export restrictions by preparing to launch a new, lower-priced Blackwell-architecture AI chipset tailored for the Chinese market, with mass production anticipated as early as June. This initiative follows the April ban of its H20 model and CEO Jensen Huang's acknowledgment that the preceding Hopper architecture cannot be further modified to meet current U.S. export controls. The forthcoming GPU, reportedly derived from the RTX Pro 6000D, will be priced between $6,500 and $8,000, a significant discount from the H20's $10,000-$12,000, reflecting its reduced specifications such as the use of GDDR7 memory instead of HBM and the omission of TSMC's CoWoS packaging. This product aims to address China's $50 billion data center market, where Nvidia's market share dramatically fell from 95% before 2022 to 50% due to U.S. curbs and intensified competition from Huawei's Ascend 910B. The financial toll of these restrictions is substantial, with Nvidia booking a $5.5 billion inventory write-off and foregoing $15 billion in sales. The new chip's memory bandwidth is projected at approximately 1.7 terabytes per second, adhering to the estimated regulatory limit of 1.7-1.8 TB/s, far below the H20's 4 TB/s. Nvidia's spokesperson highlighted the company's "limited options" and the risk of being "effectively foreclosed" from the Chinese market—which constituted 13% of its sales last fiscal year—without a compliant product and U.S. government endorsement, signaling ongoing operational headwinds.

Key Decisions for Investors

• Investors should closely monitor the adoption rate and sales performance of this new, lower-specification chip in China to assess Nvidia's capacity to offset revenue declines and market share loss in this key region.
• It is imperative to track evolving U.S. export control policies concerning AI technology to China, as any further tightening or, conversely, approvals for new products will significantly influence Nvidia's operational scope and financial results.
• The increasing competitive pressure from domestic Chinese firms, notably Huawei with its Ascend 910B, warrants careful evaluation of whether Nvidia's adapted offerings can effectively compete and maintain relevance in the face of these restricted capabilities.
• The acknowledged financial repercussions of existing sanctions, including substantial inventory write-offs and lost sales, should be carefully weighed when assessing Nvidia's near-term growth trajectory and valuation, particularly concerning its China operations.