Nvidia Developing Lower-Cost Blackwell Chip

Nvidia is reportedly planning to release a new AI chip in China for a lower price than the H20 chip. According to Reuters, production could begin as early as June. This GPU is part of Nvidia’s Blackwell processor series and is priced between $6,500 and $8,000, which is less than the H20 chip's $10,000 to $12,000 price.

The new chip will have less sophisticated specs, be simpler to produce, and use GDDR7 memory instead of the high bandwidth memory (HBM) utilized in more advanced AI chips. This aligns with U.S. regulations restricting the export of chips containing HBM to China. The new chip will also not use TSMC’s CoWoS packaging technology.

Nvidia's development of this chip is an attempt to stay competitive in the Chinese market despite export restrictions from the U.S. CEO Jensen Huang has said that China is a valuable market for Nvidia and could grow into a $50 billion revenue market. Nvidia's H20 chip recently faced a sales ban. This lower-spec AI chip was originally designed for China under the Biden administration's export rules, but the Trump administration has since tightened those rules.

Since 2022, Nvidia has seen its market share in China decline. According to Huang, their share decreased from 95% to 50%. Huang has called the U.S. export restrictions a failure, stating that they will accelerate the development of domestic alternatives in China. Nvidia is facing competition from Huawei, which has made progress in its Ascend line of AI chips. China accounted for nearly 13% of Nvidia’s revenue last year. This is the third time Nvidia has created a GPU specifically for the Chinese market because of U.S. restrictions. After the H20 chip was banned in April, Nvidia considered producing a less powerful version for China, but this plan was cancelled. Reuters reports that Nvidia also plans to produce another Blackwell chip for China in September. Meanwhile, Nvidia’s market share in China is under pressure as more customers switch to chips from Huawei.