Nvidia plans to launch new AI chip for China market, pricing may be double that of H20 chip if approved.

Nvidia plans to launch new AI chip for China market, pricing may be double that of H20 chip if approved.

Nvidia (NVDA) is set to launch a new AI chip tailored for the Chinese market, potentially priced at double that of its current H20 chip. The announcement comes amidst a backdrop of geopolitical tensions and China's push for self-sufficiency in advanced semiconductor technology.

The new chip is designed to address the gap left by Nvidia in the Chinese market following the Trump administration's restrictions on its H20 chip. The H20 chip, Nvidia's most powerful AI processor allowed for sale in China, was effectively blocked earlier this year. While the U.S. has since allowed Nvidia to resume sales, Chinese firms have been working on processors to substitute the H20 [1].

Nvidia's Chief Financial Officer, Colette Kress, cited U.S. regulatory and geopolitical issues for the lack of China sales expected in the October quarter. She mentioned that if Nvidia can clear up these issues, it could ship $2 billion to $5 billion of H20 chips to China this quarter [3]. Despite the uncertainty, at least 10 Wall Street analysts raised their price targets on Nvidia stock after the report [3].

The new chip is expected to be more versatile and can handle a broader range of AI inference tasks compared to Alibaba's previous AI processors. This development comes as Chinese tech companies, including Alibaba and ByteDance, have been pressured by Beijing to avoid purchasing Nvidia's H20 chip due to security concerns [1].

Alibaba separately reported a 26% jump in revenue in its cloud computing segment for the April-June quarter, beating market estimates. This growth is attributed to solid demand for cloud computing services [2]. The development of the new AI chip further underscores Alibaba's commitment to advancing its technology capabilities and reducing reliance on foreign chip suppliers.

The pricing of the new chip is expected to be double that of the H20 chip if approved. This pricing strategy could make the new chip more competitive in the Chinese market, where Alibaba and other domestic companies are actively investing in AI technology.

The new AI chip is part of China's broader push to build a self-sufficient AI supply chain amidst U.S. restrictions on advanced chips. This push is driven by state-backed initiatives and investments in computing infrastructure and algorithmic innovation. Startups like DeepSeek are further advancing this agenda by developing FP8 data formats optimized for Chinese chips and collaborating with next-generation hardware ecosystems [3].

The development of the new AI chip by Nvidia also highlights the complex investment environment created by the U.S.-China tech rivalry. Investors must balance exposure to U.S. and Chinese semiconductor leaders while hedging geopolitical risks. The global semiconductor landscape is undergoing a seismic shift, with China's push for AI chip self-reliance colliding with U.S. export controls and strategic decoupling [4].

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3UL0LA:0-china-s-alibaba-develops-new-ai-chip-to-help-fill-nvidia-void-wsj-reports/
[2] https://finance.yahoo.com/news/chinas-alibaba-develops-ai-chip-090846681.html
[3] https://www.investors.com/news/technology/nvidia-stock-nvda-fiscal-q2-2026-earnings/?mod=newsviewer_click&refcode=aflMarketWatch&src=A00619
[4] https://finance.yahoo.com/news/alibaba-unveils-ai-chip-china-093837562.html