Nvidia’s Cheaper Blackwell AI Chip Targets China’s Market Shift

Nvidia is preparing to launch a new AI chip for China, priced between $6,500 and $8,000. This new processor is based on Nvidia’s latest Blackwell architecture. The chip will enter mass production as early as June, according to sources who spoke to Reuters.

This new product arrives after the U.S. government blocked Nvidia’s earlier chip, the H20, from sale in China. The H20 cost between $10,000 and $12,000, making the new version significantly more affordable.

Why This Chip Matters to China

Nvidia has been a key player in China’s data center market. In fact, 13% of Nvidia’s total sales last year came from China. But new U.S. export controls have made it harder for Nvidia to sell high-end chips there.

The new chip is designed specifically to meet these restrictions. It uses GDDR7 memory instead of more powerful high-bandwidth memory. It also skips Taiwan Semiconductor Manufacturing Company’s (TSMC) advanced Chip-on-Wafer-on-Substrate packaging. These changes help it stay within U.S. limits.

Built to Fit the Rules

Export restrictions now set a strict memory bandwidth cap. The limit is around 1.7 to 1.8 terabytes per second. Nvidia’s earlier H20 chip could process data at up to 4 terabytes per second. That made it too powerful to ship to China under the new rules.

The new Blackwell-based chip will likely meet the 1.7 terabyte limit. GF Securities, a Chinese brokerage firm, has predicted this based on its GDDR7 memory.

Although we don’t know the chip’s final name yet, it may be called the 6000D or B40, based on industry estimates.

Nvidia’s Shift from Hopper to Blackwell

Nvidia’s older Hopper architecture, used in the H20, is no longer viable for China. The company tried to develop a downgraded H20 version. But that plan failed due to design limitations and regulatory issues.

Now, Nvidia is moving forward with Blackwell, its latest chip design. This new version is simpler but built with export limits in mind.

The company is also working on another Blackwell chip for China, which could begin production by September. However, its specifications are not confirmed yet.

Falling Market Share and Rising Competition

Nvidia once held 95% of China’s AI chip market. That was before U.S. curbs hit in 2022. Now, its share is down to around 50%. Nvidia’s CEO Jensen Huang shared this detail in Taipei recently.

Huawei has become Nvidia’s biggest competitor in China. Its Ascend 910B chip is growing in popularity. Huang warned that continued restrictions may push more Chinese customers toward Huawei.

$5.5 Billion Inventory Loss and Bigger Stakes

Nvidia had to write off $5.5 billion in inventory because of the H20 ban. The company also gave up $15 billion in potential sales, Huang said in a podcast interview.

Despite the losses, Nvidia is trying to stay relevant in China. By designing chips within legal limits, it hopes to maintain a foothold in a $50 billion data center market.

But as Nvidia waits for U.S. approval, it says its options are still limited.

Source – Reuters