Nvidia is preparing to launch a downgraded version of its H20 artificial intelligence chip for the Chinese market as the U.S. government tightens restrictions on exporting advanced semiconductor technologies to China.
According to three sources familiar with the matter, the U.S. chip giant has already notified major Chinese cloud computing customers of the planned release in July to preserve its foothold in a market worth $17 billion annually.
The modified chip will mark Nvidia’s latest effort to navigate U.S. export regulations while continuing to serve Chinese tech giants such as Tencent, Alibaba, and ByteDance. These companies had placed significant orders for the original H20 chip—Nvidia’s most powerful AI chip cleared for sale to China before the U.S. Commerce Department issued new licensing requirements last month.
Jensen Huang highlights the significance of China as a key market for NvidiaÂ
In light of Washington’s growing efforts to limit China’s access to cutting-edge semiconductor technology, Nvidia’s downgraded H20 represented its most recent attempt to preserve its position in one of its most important markets.
In addition, last month, Nvidia CEO Jensen Huang traveled to Beijing to highlight the strategic significance of the nation shortly after U.S. officials revealed the new export license requirements for the H20 chip. Moreover, during meetings with Chinese officials, Huang emphasized China’s importance as a major business market.
Concerning China as a significant market, Nvidia’s sales in China during the fiscal year that concluded on January 26 totaled $17 billion, or 13% of its overall revenue.
According to reports, concerns about potential military applications were likely the reason behind the United States ban on exporting Nvidia’s most cutting-edge chips to China since 2022.
The company’s most powerful AI chip, the H20, was taken off the market last month after U.S. officials informed the company that it would require an export license to be sold in China.
To curb this, new technical thresholds that the tech firm had developed would direct the creation of the updated chip designs. According to one source, the original H20 will undergo major downgrades due to these specifications, including a significantly smaller memory capacity.
Furthermore, according to a different source, downstream clients might be able to alter the module configuration to change the chip’s performance levels.
The original H20 chip was launched after the U.S. tightened AI chip export controls in October 2023. In the months that followed, Chinese companies scrambled to place orders. By early 2025, Nvidia had racked up approximately $18 billion in H20 orders—highlighting the high demand for cost-effective AI computing tools amid a surge in AI model training across China.
While Nvidia declined to comment on the modified chip, and the U.S. Commerce Department has not issued a formal response, industry analysts suggest this move illustrates the delicate balance companies must strike between political compliance and commercial survival.
American officials highlight export regulations on Nvidia’s H20 chip to be sold in China
Two people familiar with the matter said Nvidia did not inform several key clients about new U.S. export restrictions it became aware of roughly a week before they were publicly announced.
Subsequently, two well-placed sources noted that Nvidia’s China sales team appeared unaware of the impending rules, with major Chinese cloud providers still anticipating H20 chip deliveries by the end of the year. Due to the sensitivity of the issue, all sources requested anonymity.
Concerning the regulation, American officials notified the company on April 9 that its H20 chip would need an export license to be sold in China, the U.S. chipmaker revealed.
In a statement, Nvidia stated they would adhere to the government’s directives regarding what and where American companies were permitted to sell.
As geopolitical tensions continue to disrupt global tech supply chains, Nvidia’s recalibrated H20 chip underscores both the pressure from Washington and the stakes in Beijing. The launch will be a crucial test of whether a downgraded product can satisfy China’s booming AI appetite—and whether Nvidia can hold onto a market increasingly squeezed by geopolitics.
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