The global technology industry has been rocked again after the United States government banned the export of H20 chips to China. This decision is a major blow to Nvidia, which has relied on the Chinese market as one of its main sources of income. However, Nvidia is not sitting idly by, the company has prepared a secret strategy to survive and compete in the Chinese market. What steps will Nvidia take? Let's discuss further.
Why is the H20 Chip Banned in China?
In January 2025, President Joe Biden's administration issued a new policy restricting the export of AI chips to several countries, including China. This move was taken on national security grounds, as AI chips like the H20 are considered to have the potential to be used in the development of military technology.
The H20 chip itself is a modified version of Nvidia's previous AI chip, designed to comply with US export regulations. But in April 2025, the US government tightened the rules and stipulated that the H20 would require a special export license, which ultimately made the chip no longer available in China.
The Impact of This Ban on Nvidia
China is a very important market for Nvidia, contributing revenues of up to US$17 billion (around Rp280 trillion) in fiscal 2025. With this ban, Nvidia faces a major challenge in maintaining its market share in the country.
In addition, Huawei and other Chinese tech companies are starting to take over the market with their own products. Huawei, for example, has introduced the Ascend 910C chip, which it claims has performance that can compete with Nvidia chips. If Nvidia doesn't act soon, they could lose their dominance in China.
Nvidia's Secret Strategy to Get Around the Ban
Despite facing major challenges, Nvidia has prepared several strategic steps to survive in the Chinese market:
1. Modification of H20 Chip to Meet Regulations
One of the major steps Nvidia has taken is to develop a lower-end version of the H20 chip that can still be sold in China without violating U.S. export rules. The chip will have smaller memory capacity and some reduced features to meet regulatory limits.
2. Developing New AI Chips for the Chinese Market
In addition to modifying the H20, Nvidia is also reportedly developing a new AI chip specifically designed to meet US export regulations. This chip will still have high performance, but with specifications adjusted so that it can enter the Chinese market without any obstacles.
3. Strengthening Partnerships with Chinese Companies
Nvidia is also trying to strengthen ties with Chinese tech companies such as Alibaba, Tencent and ByteDance. By working more closely together, Nvidia hopes to maintain its market share in China, albeit with customized products.
4. Pressure the US Government to Ease Regulations
Nvidia CEO Jensen Huang has said that the AI chip export restrictions were the wrong decision and that the focus should be on spreading US technology globally. Huang even visited China after the ban was imposed, showing how important the Chinese market is to Nvidia.
Nvidia's Future in China
Despite the big challenges, Nvidia still has a chance to survive in the Chinese market. With the strategy that has been prepared, the company is trying to adjust to the new regulations while maintaining its position as a leader in the AI chip industry.
But competition with Huawei and other Chinese tech companies is set to intensify. If Nvidia can’t find an effective solution, it risks losing a huge chunk of market share.
Conclusion
The ban on exporting H20 chips to China has been a major challenge for Nvidia, but the company is not sitting idle. With chip modifications, new product development, and strategic partnerships, Nvidia is trying to stay in the Chinese market. But with increasing competition from local companies like Huawei, Nvidia's future in China remains uncertain.
Will Nvidia's strategy work? We'll find out in the next few months!
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