Nvidia Tweaks AI Chip for China Amid Tightening US Export Curbs

Nvidia is preparing to launch a downgraded version of its H20 artificial intelligence chip in China, as the U.S. government’s export restrictions continue to reshape the global semiconductor landscape. According to three Reuters sources familiar with the matter, the modified H20 is expected to hit the Chinese market within the next two months.

The move marks Nvidia’s latest effort to maintain its foothold in one of its most important markets while navigating Washington’s increasingly aggressive controls on advanced AI technology exports to China. The original H20 — Nvidia’s most powerful AI chip previously cleared for Chinese sales — was effectively barred from the market last month after U.S. officials ruled it would now require a specific export license.

Significant Downgrades in the New H20

Sources revealed that Nvidia has established new technical thresholds to comply with the tightened regulations, resulting in substantial downgrades to the chip’s capabilities. One notable change is a significant reduction in memory capacity, while downstream customers might still be able to modify module configurations to adjust performance within permissible limits.

Nvidia declined to comment on the matter, and the U.S. Commerce Department has yet to issue an official response.

China Remains a Vital Market

Despite escalating trade tensions, China accounted for $17 billion — or 13% — of Nvidia’s total revenue in the fiscal year ending January 26, 2025. Reflecting the country’s strategic importance, Nvidia CEO Jensen Huang personally visited Beijing last month, shortly after the updated export controls were announced, to reaffirm the company’s commitment to the Chinese market in high-level meetings with officials.

U.S. export restrictions on Nvidia’s cutting-edge chips have been in place since 2022 over concerns about their potential military applications. The original H20 itself was a response to Washington’s tighter controls introduced in October 2023.

Chinese Tech Giants Are Still Buying

Chinese tech leaders such as Tencent, Alibaba, and ByteDance had significantly ramped up orders for the H20 in recent months, driven by surging demand for AI infrastructure. Startups like DeepSeek have also sought cost-effective AI solutions, further fueling orders. As of last month, Nvidia had reportedly accumulated $18 billion worth of H20 orders — underlining the chip’s importance even in its constrained form.