Nvidia is developing a new chip for China. How is the company trying to win back an important market?

Nvidia is preparing a new chip for the Chinese market based on the Blackwell architecture, which should outperform the H20 model. Last week, U.S. President Donald Trump said he may allow the company to supply Beijing with more advanced solutions, but Reuters sources emphasize: getting the consent of U.S. regulators remains in question. Washington fears that access to AI technology from the US will strengthen China's military capabilities. Against the backdrop of these risks, Wall Street analysts see China as both a source of growth for Nvidia and a source of high volatility.

Nvidia is developing a new artificial intelligence chip for China based on its latest Blackwell architecture, Reuters reports citing sources. The chip will be more powerful than the H20 model, the sale of which is still allowed in China, despite the fact that last week Chinese authorities recommended local companies not to use Nvidia H20 AI processors, especially in projects related to the state and national security.

Although U.S. President Donald Trump said last week he may allow Nvidia to sell more advanced chips in China, getting approval from U.S. regulators is far from guaranteed, the agency's sources said. Washington is wary about giving China excessive access to AI technology from the United States, Reuters wrote.

The new chip, tentatively dubbed the B30A, will use a single-chip architecture that Reuters' interlocutors say will provide about half the processing power compared to the more complex dual-chip configuration in Nvidia's flagship B300 gas pedal.

A single-chip architecture means that all the major elements of an integrated circuit are fabricated on a single solid silicon crystal, rather than spread across several, the agency explains.

The new chip will feature high-speed memory and Nvidia's NVLink technology for fast data transfer between processors - the same features the H20 model, based on the previous Hopper architecture, has, Reuters notes.

The specifications of the chip have not yet been fully confirmed, but according to the agency's sources, Nvidia expects to hand over samples to Chinese customers for testing as early as next month.

Nvidia said in comments to Reuters that the company is evaluating a wide range of products to "be ready to compete within the limits allowed by governments."

"Everything we offer is fully approved by the relevant authorities and is for beneficial commercial use only," the company added.

Nvidia's stock has risen 35% this year and is now trading near an all-time high. Ahead of the quarterly report, which will be released next week, several investment banks have raised their target prices on the chipmaker's shares. Morgan Stanley, Cantor Fitzgerald and Mizuho expect Nvidia to beat revenue and profit expectations due to growing demand for computing power for AI and the development of the Blackwell architecture, MarketWatch writes.

Morgan Stanley increased its target on Nvidia shares from $200 to $206, confirming the recommendation "above market" (Overweight). The new forecast assumes a rise in quotes by about 13% relative to the close of trading on August 18.

Cantor Fitzgerald also maintained a positive view on the company's securities, but was more optimistic, with the target price raised from $200 to $240, offering upside potential of about 32% to Monday, August 18 levels.

Mizuho raised its stock price estimate to $205 from $192, expecting a gain of about 12.6%.

China accounted for 13% of Nvidia's revenue last fiscal year. After the company was ordered to suspend sales of a special H20 chip for the Chinese market in April of this year, the Trump administration effectively lost some of its export control revenue, Bloomberg noted.

Just a few months later, on August 11, Nvidia and another chip maker, AMD, struck a deal with Washington under which they would be allowed to resume sales of specialized AI chips to China on the condition that 15% of the proceeds from those shipments would be transferred to the U.S. government. In response, according to Bloomberg, Beijing urged Chinese companies to refrain from using Nvidia's H20 chips.

Despite the uncertainty, the Chinese market remains an important source of potential revenue growth for Nvidia, according to Wall Street. According to Xi Jay Mewes of Cantor Fitzgerald, recent news is creating short-term volatility, but China risks are already factored into the chipmaker's quotes, MarketWatch writes.

"The main goal is to anchor China on the Nvidia platform. Any progress here will be taken positively," he said.

Morgan Stanley analyst Joseph Moore added that the agreement to transfer 15% of revenue could face legal challenges.

Mizuho's Vijay Rakesh predicts that China could add between 300,000 and 500,000 additional GPU shipments for Nvidia and AMD in 2026, with "the downside from restrictions on AI chips from China remaining limited." However, Moore said it will be difficult to forecast revenue from the Chinese market until the end of the year, until the specific terms of the H20 chip licenses are determined.

The Trump administration wants to ease restrictions on chip exports also in an effort to keep China's AI ecosystem dependent on less advanced U.S. technology for as long as possible, thus depriving Huawei of revenue and technical expertise that the company could gain from having a wider range of customers, Bloomberg writes.

According to two Reuters sources familiar with the company's plans, Nvidia is also preparing to start shipping another new chip for China, the RTX6000D, designed on the Blackwell architecture and aimed primarily at AI inference tasks. It will be cheaper than the H20 thanks to its more modest specifications and simplified manufacturing. The first small batches of RTX6000D will arrive to Chinese customers in September, the agency writes.

However, U.S. lawmakers from both the Democratic and Republican parties have expressed concerns that even access to simplified versions of flagship AI chips would hamper U.S. efforts to maintain leadership in artificial intelligence, Reuters notes.

Nvidia and other companies believe it is important to maintain China's interest in their products - compatible with Nvidia's software tools - so that Chinese developers do not completely switch to the solutions of competitors such as Huawei, the agency writes.

This article was AI-translated and verified by a human editor