According to sources familiar with the matter, Nvidia is preparing to introduce a new artificial intelligence (AI) chip specifically designed for the Chinese market. This move comes after the United States imposed stricter export controls, limiting the sale of advanced AI technology to China. The new chip is expected to be much cheaper than Nvidia’s previous H20 model, with a price range between $6,500 and $8,000—significantly lower than the H20, which sold for $10,000 to $12,000.

The lower price is due to the chip’s reduced performance and simpler design. Unlike Nvidia’s high-end models, this new chip will not use the most advanced memory technology. Instead, it will rely on standard GDDR7 memory, which is less powerful but still functional for certain AI tasks. Additionally, the chip will not be manufactured using the latest packaging technology, further cutting costs. Production is expected to begin as early as June.

Nvidia has not yet finalized the name of the new chip, but some industry analysts believe it could be called the 6000D or B40. The company is also reportedly working on another version of this chip, set to enter production by September, though details about its specifications remain unclear.

A spokesperson for Nvidia mentioned that the company is still exploring its options, stating, “Until we settle on a new product design and receive approval from the U.S. government, we are effectively foreclosed from China’s $50 billion data center market.” The U.S. restrictions have made it difficult for Nvidia to continue selling its most powerful AI chips in China, forcing the company to create modified versions that comply with the rules.

Nvidia’s Struggles in the Chinese Market

China has been a major market for Nvidia, contributing around 13% of its total sales in the past year. However, due to repeated U.S. export bans, Nvidia has had to redesign its chips multiple times to continue doing business in China. The latest restrictions, introduced in April, completely blocked the sale of the H20 chip, leading Nvidia to consider alternative solutions.

Initially, the company explored making a downgraded version of the H20, but that plan did not work out. Nvidia’s CEO, Jensen Huang, explained that the older Hopper architecture used in the H20 could no longer be adjusted to meet the new U.S. regulations. He also warned that if these restrictions continue, more Chinese companies may turn to local alternatives, such as Huawei’s Ascend 910B chip.

Huang revealed that Nvidia’s market share in China has dropped dramatically—from 95% before 2022 to just 50% today. The H20 ban alone cost the company $5.5 billion in unsold inventory, and Huang estimated that Nvidia lost an additional $15 billion in potential sales due to the restrictions.

How US Export Rules Are Affecting AI Chip Performance

The latest U.S. export controls focus on limiting the memory bandwidth of AI chips sold to China. Memory bandwidth determines how quickly data can move between the processor and memory, which is crucial for AI applications that require fast data processing. The new rules cap memory bandwidth at 1.7 to 1.8 terabytes per second, whereas Nvidia’s H20 chip was capable of reaching 4 terabytes per second.

Analysts predict that the new Nvidia chip for China will have a memory bandwidth of around 1.7 terabytes per second, just within the allowed limit. By using GDDR7 memory instead of more advanced options, Nvidia can keep costs low while still complying with U.S. regulations. However, this means the chip will not be as powerful as Nvidia’s top-tier models sold in other markets.

What This Means for the Future of AI in China

The ongoing restrictions have forced Nvidia to adapt, but they have also given Chinese tech companies like Huawei an opportunity to grow. With Nvidia facing limitations, more Chinese firms may shift to locally made AI chips, reducing their reliance on foreign technology. Huang acknowledged this trend, stating that if U.S. policies remain strict, Chinese buyers will increasingly turn to domestic alternatives.

Despite these challenges, Nvidia remains committed to the Chinese market. The company is working on new chip designs that comply with export rules while still meeting the needs of Chinese customers. However, the long-term impact of these restrictions on Nvidia’s business—and on the global AI industry—remains uncertain.

As the situation develops, industry experts will be watching closely to see how Nvidia and other tech companies navigate the complex landscape of international trade and AI development. For now, Nvidia’s focus is on launching its more affordable AI chip for China, hoping to regain some of its lost market share while adhering to U.S. regulations.