The biggest beneficiary of the AI boom is still trying to figure how to sell its chips to China without running afoul of Washington’s chip controls.
Nvidia is working on a version of its new flagship AI chip for the China market, Reuters reports citing anonymous sources. The U.S. chip designer is reportedly working with Inspur, one of its major distributors in China, to help launch and sell the made-for-China version of its Blackwell series chip.
Nvidia declined to comment and Inspur did not immediately respond to Fortune’s request for comment.
The U.S. has controlled sales of Nvidia’s AI chips to China since October 2022. Nvidia has tried to develop new chips that complies with U.S. regulations, only to run afoul of Washington tightening the screws further and Chinese customers wary of a less-powerful product.
Before the U.S. imposed chip export controls, China used to contribute a quarter of Nvidia’s data center revenue. Data center revenue aligns with the company’s chip business. The company admitted in May that data center revenue in China is down significantly since Washington expanded chip controls in October 2023.
Still, Nvidia is poised to sell over a million of its H20 chips, currently the most advanced chip available to the Chinese market, this year, according to research firm SemiAnalysis. The firm expects H20 sales to generate $12 billion in sales for the U.S. chip designer this year. (The company had $60.9 billion in revenue for its most recent fiscal year, which ended January 2024.)
Nvidia unveiled its Blackwell chip series in March, with mass production set for later this year. The company claims the new platform will allow users to run real-time generative AI applications at significantly lower cost than its predecessors.
The U.S. has shown no signs of letting up the pressure on semiconductor-related export control measures.
Washington is reportedly pressuring the Netherlands and Japan to further restrict Chinese access to chipmaking equipment, including considering invoking a rule that would give it jurisdiction over any product that uses U.S. technology.
Nvidia shares rose around 1.5% in pre-market trading on Monday. The company’s shares dropped almost 10% last week following reports of the possibility of expanded controls, as well as former President Donald Trump’s comments that the island of Taiwan, a chipmaking hub, should pay for its own defense.
Update July 23, 2024: This article has been updated with a response from Nvidia.
