Nvidia Stops H20 Chip Production in China, Eyes New AI Strategy

Nvidia has stopped producing its H20 AI chip for the Chinese market due to security concerns raised by Beijing. The company is now focusing on new Blackwell chips, which have been presented to U.S. officials, and is awaiting approval. The Chinese market is crucial for Nvidia, with analysts estimating $15 billion in potential sales for AI chips.

Nvidia, the leading provider of AI chips, has halted production of its H20 AI chip for the Chinese market due to security concerns raised by Beijing. The company has instructed suppliers to suspend work on the chip, which was designed specifically for the Chinese market to comply with U.S. export restrictions [1]. This directive follows a directive from the Chinese government to local tech companies to stop buying the chips due to alleged security concerns [1].

Nvidia's CEO Jensen Huang acknowledged the concerns and is in discussions with Chinese officials to address them. He stated that Nvidia has not implemented any "backdoors" in the H20 chips and that the company is working on a new chip, the B30A, which is more advanced and designed for AI data centers [2]. Huang is also in dialogue with the U.S. government to offer the B30A to China [2].

The Chinese market is crucial for Nvidia, with analysts estimating potential sales of $15 billion for AI chips. If China completely bans the H20 chips, it could put Nvidia's over $20 billion of annual sales in China at risk [1]. However, assuming Nvidia is still allowed to sell less advanced chips in the market, it should be able to capture some revenue in 2026, with demand further limited in 2027 as local supply capabilities ramp up [1].

Nvidia's stock was slightly lower overnight, with shares dipping 0.2% to 174.98 on Thursday, holding below the 21-day moving average [1]. The company will report its fiscal Q2 earnings on August 27.

References:
[1] https://www.cnbc.com/2025/08/22/nvidia-halt-h20-chip-production-china-cracks-down.html
[2] https://www.ainvest.com/news/nvidia-asks-suppliers-stop-h20-ai-chip-production-chinese-concerns-2508/