Nvidia is reportedly designing a new artificial intelligence (AI) chip specifically for the Chinese market, aiming to outperform its existing H20 model. The move comes after U.S. export restrictions limited Nvidia’s ability to sell its most advanced chips, such as the A100 and H100, to China.

The Successor to H20 in the Making

Sources familiar with the matter suggest that Nvidia’s upcoming AI chip will not only comply with U.S. trade regulations but also offer enhanced computing performance compared to the H20, which was introduced last year as a downgraded alternative for China.

Balancing Trade Rules and Market Demand

The new chip is being designed carefully to ensure it does not cross the U.S. government’s performance thresholds while still providing Chinese companies with a competitive AI solution. This approach highlights Nvidia’s strategy of maintaining a foothold in the world’s second-largest AI market without violating restrictions.

Rising Competition from Local Players

While Nvidia dominates the global AI chip market, Chinese firms such as Huawei and Biren are quickly advancing with their own accelerators. Industry analysts believe Nvidia’s new chip could help the company retain market share amid this intensifying competition.

A Crucial Market for Nvidia’s Growth

China accounts for nearly 20% of Nvidia’s data center revenue, making it a vital market. Despite export restrictions, Nvidia remains committed to delivering compliant yet powerful AI hardware to sustain its growth trajectory in the region.