Nvidia is gearing up to challenge Huawei in China’s rapidly growing AI chip market with a new processor designed to navigate U.S. export restrictions – a calculated move to preserve its foothold in the country.
Sources told Reuters that the upcoming chip, based on Nvidia’s Blackwell architecture, will be priced between $6,500 and $8,000. That’s a sharp drop from the now-banned H20 model, which sold for $10,000 to $12,000. Production is expected to begin in June.
To meet compliance requirements, Nvidia has made significant trade-offs. The new chip will use the RTX Pro 6000D and standard GDDR7 memory instead of the high-bandwidth memory used in premium models. It will also omit Taiwan Semiconductor’s advanced CoWoS packaging technology – a cost-saving move that reduces both performance and complexity.
This release marks Nvidia’s third attempt to tailor a chip for China following the effective ban of the H20 in April. That setback forced the company to write down $5.5 billion in Chinese inventory and commitments.
Huawei Gains Ground
Meanwhile, Huawei is emerging as a dominant force. Its Ascend 910C and 910B chips have gained traction with major Chinese tech companies, including Tencent, Baidu, and ByteDance, especially for inference applications. Huawei’s CloudMatrix 384 rack system also directly challenges Nvidia’s high-end GB200 NVL72 platform, signaling its ambitions to compete across the entire AI hardware stack.
Pricing pressure is mounting. Huawei’s Ascend chips have traded at premiums over Nvidia’s H20, which has reportedly been discounted by more than 10 percent in recent months.
Nvidia CEO Jensen Huang recently acknowledged the shift, noting that the company’s market share in China has been cut in half since export rules tightened.
The $50 Billion Question
Despite mounting challenges, Nvidia is not walking away. Huang estimates China’s AI chip market could be worth $50 billion, and the company brought in over $17 billion in sales from China in 2024 alone.
Sources say Nvidia is already working on a second Blackwell-based chip tailored for the Chinese market, with production targeted for September. The strategy appears aimed at segmenting the market and addressing various compliance levels with differentiated products.
Looking Ahead
Still, Nvidia faces a tough road. Will Chinese clients accept lower-performance chips from a U.S. supplier when local alternatives are improving rapidly?
Huang recently acknowledged that “China is right behind us. We’re very, very close,” in terms of AI capabilities – a remark that underscores how narrow the gap has become. With strong government support behind Huawei and other domestic players, Nvidia’s long-term prospects in China remain uncertain.
