Nvidia modifies H20 chip for Chinese market amid U.S. export restrictions

In response to U.S. export restrictions, Nvidia is set to release a modified version of its H20 artificial intelligence chip for the Chinese market by July 2025. The original H20 chip was blocked from access in China after the U.S. government implemented new export license requirements. This restriction came as part of broader efforts by Washington to limit China's access to advanced semiconductor technology due to concerns about potential military applications of these technologies. This latest move by Nvidia demonstrates its commitment to maintaining relationships with Chinese customers, including major cloud computing providers, as China represents a significant portion of the company's revenue. In the last fiscal year, China accounted for $17 billion, or approximately 13% of Nvidia's total sales. Nvidia's CEO, Jensen Huang, visited Beijing recently to emphasize the importance of the Chinese market during discussions with local officials. To comply with new regulations, Nvidia developed new technical specifications for the modified H20. These changes will result in a downgraded chip, which will have significantly reduced memory capacity compared to its predecessor. Despite these limitations, sources indicate that downstream customers may still be able to adjust the performance levels of the modified chip by altering module configurations. This flexibility may help mitigate the impact of the downgrade for key users in China, such as major tech companies like Tencent, Alibaba, and ByteDance. As trade relations become increasingly strained, Nvidia's strategic adaptation highlights the ongoing challenges faced by U.S. tech firms in navigating international markets. The company's proactive approach to modifying its chip design illustrates its efforts to not only comply with U.S. regulations but also to retain a foothold in the key Chinese market, amid growing demand for advanced AI solutions.