Nvidia is considering developing a new AI chip for the Chinese market, according to CEO Jensen Huang. This comes after the US imposed export restrictions on its H20 chips, which were specifically designed for China.

Huang said, “We don’t have anything to announce at the moment, but we’re considering it,” noting the need to understand export limits before creating new products.

He confirmed that Nvidia won’t release any new Hopper-series products for China due to performance limitations tied to the export rules.

Despite the ban, Nvidia saw a 69% year-on-year revenue increase in Q1 and gave an optimistic forecast for the current quarter. However, the company expects an US$8 billion revenue loss in Q2 due to the restrictions.

It also reported a US$4.5 billion charge in Q1 related to H20 chip inventory and purchase obligations.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Export controls accelerating China’s domestic AI chip development

Nvidia’s market share in China has reportedly plummeted from 95% to 50% as a direct result of U.S. export restrictions, creating a vacuum that Chinese manufacturers are rapidly filling 1.

This shift aligns with a broader pattern where export controls intended to limit access to advanced technology often stimulate domestic innovation in target countries.

The financial impact is substantial and immediate. Nvidia anticipates an $8 billion revenue loss in Q2 2025 from the H20 chip ban and has already recorded a $4.5 billion charge in Q1 due to excess inventory and purchase obligations.

Jensen Huang’s statement that “the U.S. has based its policy on the assumption that China cannot make AI chips… that assumption was always questionable and now it’s clearly wrong” reflects growing industry concern about unintended policy consequences 1.

Analysts predict that if current trends continue, Chinese companies could potentially dominate their domestic chip market by 2030, representing a dramatic reversal from previous U.S. dominance in this sector 2.

2️⃣ AI chip market growing despite geopolitical complications

The global AI chip market is projected to expand dramatically from $6.64 billion in 2018 to $91.18 billion by 2025, representing a compound annual growth rate of 45.2% despite increasing trade restrictions 3.

This growth is driving the broader semiconductor industry, which is expected to reach $697 billion in sales by 2025, with generative AI chip sales alone potentially exceeding $150 billion 4.

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