Nvidia to resume H20 AI chip sales to China, eyeing $15-20B revenue

Nvidia will resume sales of H20 AI chips to China after CEO Jensen Huang met with President Donald Trump, with Chinese firms already rushing to place orders for the restricted processors. The move could generate $15 billion to $20 billion in additional revenue for Nvidia this year, marking a significant shift in US-China technology relations after the chips were effectively banned in April.

What you should know: Nvidia expects to receive US government licenses soon to restart shipments of H20 chips, which represent the company’s most capable AI processors legally available in China.

• The US government has assured Nvidia that licenses will be granted, and the company hopes to start deliveries soon.
• H20 chips contain less computing power than versions sold elsewhere due to export restrictions imposed in 2022.
• Chinese tech giants including ByteDance (TikTok’s parent company) and Tencent are scrambling to place orders through an approved list managed by Nvidia.

The big picture: The resumption comes after H20 sales were effectively banned in April with onerous export license requirements, forcing Nvidia to take a $4.5 billion write-off for excess inventory and purchase obligations.

• Chinese sales generated $17 billion in revenue for Nvidia in the fiscal year ending January 26, representing 13 percent of total sales.
• Since ChatGPT’s launch in 2022, Nvidia’s financial trajectory has been tied to demand for specialized AI hardware.
• Nvidia’s data center GPUs perform the massive parallel computations required by neural networks, processing countless matrix operations simultaneously.

In plain English: Think of AI chips like powerful calculators that can solve thousands of math problems at once. Neural networks (the “brains” of AI systems like ChatGPT) need to perform millions of calculations simultaneously to understand and generate text, which is exactly what Nvidia’s specialized processors excel at.

What they’re saying: Huang emphasized the importance of the Chinese market during his visit to Beijing, where he’s scheduled to speak at a supply chain expo.

• “The Chinese market is massive, dynamic, and highly innovative, and it’s also home to many AI researchers,” Huang told Chinese state broadcaster CCTV.
• “Therefore, it is indeed crucial for American companies to establish roots in the Chinese market.”

What’s next: Nvidia announced it will introduce a new “RTX Pro” chip model specifically tailored to meet regulatory rules in the Chinese market, though the company provided no details about its specifications or capabilities.