The biggest beneficiaries of the AI boom are still figuring out how to sell chips to China without running afoul of Washington's semiconductor regulations.
Citing anonymous sources, Reuters reported that Nvidia is developing a version of its new flagship AI chip for the Chinese market. The US chip design company is reportedly working with Inspur, one of the main distributors in China, to help launch and sell the China version of its Blackwell series chips.
Neither Nvidia nor Inspur immediately responded to Fortune's requests for comment.
The United States is restricting Nvidia's sales of AI chips to China starting in October 2022. Nvidia has been trying to develop new chips that comply with U.S. regulations but has run into trouble as Washington tightened its grip and Chinese customers became wary of inferior products.
Before the U.S. imposed semiconductor export restrictions, China accounted for a quarter of Nvidia's data center revenue, which is tied to the company's semiconductor business. The company acknowledged in May that data center revenue from China has declined significantly since the U.S. expanded semiconductor restrictions in October 2023.
Still, Nvidia is on track to sell more than 1 million of its H20 chips this year, the most advanced chips currently available in the Chinese market, according to research firm Semianalysis. The company expects H20 sales to generate $12 billion in revenue for the U.S. chip designer this year. (The company had revenue of $60.9 billion in its most recent fiscal year, which ended in January 2024.)
Nvidia unveiled its Blackwell chip series in March, with mass production set to begin later this year. The company claims that the new platform will enable users to run real-time generative AI applications at a significantly lower cost than traditional alternatives.
The United States shows no signs of easing up on its semiconductor-related export control measures.
Washington is reportedly pressuring the Netherlands and Japan to further restrict Chinese access to semiconductor manufacturing facilities, including by invoking rules that would give the US jurisdiction over any products that use American technology.
Nvidia shares rose about 1.5% in premarket trading on Monday after the company's shares fell nearly 10% last week on reports of possible expanded restrictions and after former President Donald Trump said chip-making hub Taiwan should pay for its own defense.
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