Nvidia is adapting its chip strategy for the Chinese market in response to U.S. export restrictions and increasing competition from Huawei. According to Nikkei Asia, Nvidia plans to release a modified Hopper-series chip for AI applications in China in the coming months. This new chip will be a further downgraded version of the Hopper chip, lacking high-bandwidth memory (HBM) and instead utilizing GDDR7 memory to comply with U.S. export regulations.

Nvidia CEO Jensen Huang confirmed that the company will not release another Hopper-series chip for China due to these restrictions. Speaking on Taiwan's Formosa TV News network, Huang emphasized China's importance to Nvidia's growth, noting that the country generated $17 billion in revenue for Nvidia in the last fiscal year, accounting for 13% of the company's total sales. The CEO stated that previous AI export regulations were misguided and should have focused on maximizing US technology globally.

Reuters reported earlier this month that Nvidia intends to release a downgraded version of the H20 chip for China within the next two months to bolster sales amid market share losses to domestic competitors like Huawei. Huang visited China shortly after the U.S. imposed new restrictions on China-bound shipments of H20 chips, the only AI chip Nvidia can legally sell in China.

The U.S. Framework for Artificial Intelligence Diffusion, implemented in January, aims to restrict AI chip exports to most countries. According to Reuters, Nvidia is evaluating how to address the China market after the US government placed limits on sales of its Hopper H20 chip there but will not put out another version from the Hopper series.

Nvidia is warning that U.S. export controls are giving Huawei a free hand in the Chinese AI chip market.