In response to the U.S. government's export ban on its H20 AI chips, global AI chip leader Nvidia is actively adjusting its strategy and quietly initiating the development of a new AI chip. According to reports, Nvidia has informed three major Chinese clients that the company is working on a brand-new AI chip that will strictly comply with U.S. export controls while aiming to meet China’s growing demand for high-performance computing.
This new chip is designed to navigate around the current export restrictions while still offering powerful AI capabilities tailored for the Chinese market. The move highlights Nvidia’s determination to maintain its technological leadership in the increasingly competitive AI landscape.
Analysts believe this swift action reflects not only Nvidia’s agility in responding to policy shifts but also the strategic importance of China as the world’s largest AI market. With domestic competitors like Huawei’s Ascend 910C chips catching up, Nvidia is clearly not ready to surrender this key battlefield.
This chip war has become the latest flashpoint in the ongoing tech tensions between the U.S. and China. There’s no denying that the U.S. export restrictions have already had a significant impact on Nvidia’s business and stock price. Due to limitations on H20 chip exports, Nvidia is expected to take a charge of approximately $5.5 billion in the first quarter of 2025, covering inventory, purchase commitments, and customer orders. China's contribution to Nvidia’s total revenue, which once stood at 26%, is forecasted to fall to 13%—a stark indication of the policy’s toll on its China business. Additionally, Nvidia’s stock has remained volatile, dropping below $120 for several consecutive weeks.
Nonetheless, Nvidia’s rapid strategic adjustment and immediate action to redesign its chips underscore the continued importance of the Chinese market. Despite political and policy barriers, China remains a critical arena for global AI development. Whether it’s the scale of data, the range of applications, or the speed of enterprise adoption, China exhibits tremendous growth potential and appeal.
By quickly adapting and launching a new chip plan, Nvidia shows its resolve not to give up on this vital market. In fact, it’s not alone—more and more global tech giants are seeking a delicate balance between compliance and retaining access to China’s vast customer base amidst increasing pressure for technological decoupling.
It’s expected that "compliance-oriented AI chip customization" will become a growing trend. Meanwhile, Chinese companies will continue accelerating efforts to catch up and replace foreign technologies. In this new wave of global AI competition, China is not just a sales market—but also a proving ground for innovation and a source of technological breakthroughs.
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