Nvidia Downgrades H20 AI Chip for China to Bypass US Export Controls

Modified version expected in July as chipmaker seeks to retain Chinese market presence

Nvidia is preparing to launch a downgraded version of its H20 artificial intelligence chip in China by July, according to three sources familiar with the matter. The move is part of the company’s strategy to comply with U.S. export regulations while continuing to serve one of its most valuable markets.

Two sources confirmed that Nvidia has already informed major Chinese clients — including top cloud service providers — about the upcoming release. The revised chip will be substantially less powerful, featuring significantly reduced memory and computing capabilities to meet updated U.S. trade restrictions.

🔗 View US Commerce Department export control updates

H20 chip blocked under new export rules

The original H20 chip, previously Nvidia’s most powerful AI processor approved for sale in China, was blocked last month after the U.S. Commerce Department revised its export control policies. The new rules require Nvidia to obtain an export license before shipping certain advanced chips to Chinese entities.

In response, Nvidia has developed a modified chip design with adjusted technical specifications to ensure compliance. One source noted that the downgraded chip will offer limited customization options for downstream partners to manage performance configurations.

Nvidia declined to comment publicly on the matter. The U.S. Commerce Department has also not responded to media inquiries.

🔗 Related: Nvidia Revenue Report 2025

China remains vital to Nvidia’s business

China generated $17 billion in revenue for Nvidia during the fiscal year ending January 26, accounting for 13% of the company’s global sales. The importance of the Chinese market was underscored by CEO Jensen Huang’s recent visit to Beijing, where he met with officials and reiterated the company’s commitment to the region.

The revised H20 launch is Nvidia’s latest effort to navigate an increasingly complex geopolitical landscape. The U.S. has restricted exports of high-end chips to China since 2022, citing national security risks and potential military applications of AI technologies.

The H20 chip was first introduced following tighter export control measures enacted in October 2023. Chinese tech giants like Tencent, Alibaba, and ByteDance have since placed large orders, leveraging the chip for cost-effective AI development amid rising demand from domestic startups.

$18 billion in orders already placed

As of last month, Nvidia had accumulated over $18 billion in orders for the H20 chip, according to a report by Reuters. Industry analysts say the modified version is unlikely to match the performance of the original, but may help Nvidia maintain market presence while avoiding penalties under U.S. trade law.

The success of this workaround may set a precedent for other chipmakers facing similar restrictions in cross-border trade.