Investing.com – Nvidia (NASDAQ: NVDA) shares rose in pre-market trading after the company announced plans to release a less powerful version of its H20 artificial intelligence chip in China within the next two months. This move aims to comply with stricter U.S. export restrictions. Nvidia has informed several major Chinese customers, including cloud computing service providers, about this decision. The H20 is currently the most powerful chip Nvidia can sell in China under existing export controls. However, recent signals indicate even tighter restrictions on technology exports to China, requiring Nvidia to obtain a license for exporting the current H20 version. In April, Nvidia announced a $5.5 billion write-off related to these export controls. By downgrading the chip—mainly through reducing its computing power and memory capacity—Nvidia hopes to circumvent the new controls. While this downgrade may make the chip less competitive in the Chinese market, it remains crucial for China’s AI development efforts. Companies like DeepSeek, Baidu (NASDAQ: BIDU), and Alibaba (NYSE: BABA) rely on the H20 chip. Nevertheless, Nvidia faces competition from domestic developers such as Huawei, which already produces competing AI chips. China represents approximately 13% of Nvidia’s total revenue, amounting to about $17 billion in the fiscal year ending January 2025. Nvidia CEO Jensen Huang emphasized China’s significance during his visit to Beijing in April and noted the potential for the Chinese AI market to reach $50 billion annually.
— new from Investing.com