### Nvidia Introduces a New AI Chipset for China to Navigate Regulatory Challenges

Nvidia is set to release a new artificial intelligence chipset for the Chinese market at a much lower cost compared to its recently restricted H20 model, sources familiar with the matter revealed. The new GPU, which is expected to commence mass production as early as June, will leverage Nvidia's cutting-edge Blackwell-architecture AI processors.

The newly designed chipset is anticipated to be priced between $6,500 and $8,000, significantly more affordable than the $10,000 to $12,000 price tag of the now-restricted H20 model. Sources indicated that the reduced price is attributed to its more modest specifications and simpler manufacturing processes. Unlike the H20, this new GPU will be based on Nvidia's RTX Pro 6000D, a server-class graphics processor, and will utilize conventional GDDR7 memory instead of the more sophisticated high bandwidth memory.

Moreover, the new chip will not incorporate Taiwan Semiconductor Manufacturing's advanced Chip-on-Wafer-on-Substrate (CoWoS) packaging technology, according to the sources. The specifics such as price, specifications, and production timelines have not been previously disclosed. An Nvidia spokesperson mentioned that the company is still evaluating its limited options. "Until we settle on a new product design and receive approval from the U.S. government, we are effectively foreclosed from China's $50 billion data center market," the spokesperson said.

China remained a significant market for Nvidia, accounting for 13% of its sales in the past financial year. This development marks the third instance where Nvidia has had to customize its GPUs for China due to stringent U.S. export restrictions aimed at curbing Chinese technological advancements. After the U.S. banned the H20 model in April, Nvidia considered developing a downgraded version of the H20 for China, but the idea was scrapped.

Nvidia CEO Jensen Huang stated last week that the company’s older Hopper architecture could no longer support further modifications under the current U.S. export restrictions. Nvidia's market share in China has dropped dramatically from 95% before 2022 to 50% currently, largely due to these regulatory actions. The main competitor to Nvidia in China is Huawei, which produces the Ascend 910B chip. Huang cautioned that continued export curbs would likely push Chinese customers towards Huawei's products for their AI needs.

The ban on the H20 has already resulted in Nvidia writing off $5.5 billion in inventory and abandoning $15 billion in potential sales. New export regulations have imposed strict limits on GPU memory bandwidth, a critical parameter for AI tasks requiring extensive data processing. The new rules cap memory bandwidth at 1.7-1.8 terabytes per second, compared to the 4 terabytes per second the H20 could achieve. GF Securities projected that the new Nvidia GPU will hit around 1.7 terabytes per second using GDDR7 memory technology, staying within the bounds set by the new U.S. regulations.