Nvidia reportedly plans China R&D center as export limits hit

Nvidia is reportedly searching for a location in Shanghai to establish a research and development center, focusing on the Minhang and Xuhui districts.

The search started earlier this year and gained momentum after CEO Jensen Huang’s visit to China last month.

During the trip, Huang met with Chinese officials shortly after new U.S. export restrictions were imposed on Nvidia’s H20 chips.

China accounted for US$17 billion of Nvidia’s revenue in the fiscal year ending January 2025, or 13% of total sales.

To work around export limitations, Nvidia is expected to release a downgraded version of its H20 chip for the Chinese market within two months.

Shanghai’s local government may support the project with incentives such as tax reductions and land allocations.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Nvidia’s China R&D strategy reveals the evolution of tech decoupling

Nvidia’s Shanghai R&D plans reflect a dramatic shift in its China strategy since 2018, when CEO Jensen Huang confidently declared there wouldn’t be a US-China trade war due to economic interdependence1.

The contrast between that optimism and today’s reality reveals how semiconductor firms have been forced to adapt their approach during five years of escalating export controls.

Despite restrictions, China remains crucial for Nvidia, generating $17 billion in revenue (13% of total sales) in the last fiscal year, with Huang now warning that exclusion from China would represent a “tremendous loss.”

This development comes as Chinese companies like Huawei ramp up domestic chip development, though their Ascend 910B chips still lag behind, with reports indicating Nvidia maintains a 40% performance advantage2.

Nvidia’s move demonstrates the “in China, for China” approach increasingly adopted by US tech companies to maintain market presence while navigating export restrictions.

2️⃣ Shanghai’s incentives for Nvidia highlight the high-stakes regional competition for AI talent

Shanghai’s willingness to offer tax reductions and substantial land allocations for Nvidia’s R&D center reflects the fierce competition among Chinese cities to become AI innovation hubs.