Nvidia Reportedly Designing New AI Chips For Alibaba, ByteDance, Tencent After Jensen Huang-Led Company Warned US Export Ban On H20 Could Cost $5.5 Billion

Nvidia Corporation NVDA is reportedly developing redesigned artificial intelligence chips for major Chinese tech firms after warning that tightened U.S. export restrictions on its H20 chip could lead to multibillion-dollar losses.

What Happened: Nvidia has informed key Chinese customers — including Alibaba Group BABA, ByteDance and Tencent Holdings TCEHY — that it is working on new AI chip designs tailored to comply with U.S. export regulations, reported Reuters, citing The Information on Friday.

Nvidia CEO Jensen Huang discussed the new plans with customers during a mid-April trip to Beijing, the report noted, citing three people involved in the conversation. This was shortly after the company disclosed that the export restrictions could result in a $5.5 billion revenue hit.

A prototype of the redesigned chip could be ready as early as June, the report said. Additionally, Nvidia is said to be developing a China-specific version of its Blackwell AI chip.

Why It's Important: Earlier this week, Brian Colello, equity strategist at Morningstar, voiced a pessimistic view of Nvidia's business outlook in China but remained optimistic about the company's performance in developed markets.

Colello pointed to rising competition from Huawei as a major challenge, saying, "I think it's pretty much game over for Nvidia in China."

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On Thursday, Nvidia CEO Jensen Huang told U.S. lawmakers that restrictions on exporting AI chips could be giving China's Huawei Technologies an edge in the global race for AI dominance.

On the same day, Nvidia also took aim at AI startup Anthropic for advocating stricter U.S. export controls on AI chips to China.

Price Action: On Friday, Nvidia shares climbed 2.59%, ending the day at $114.50, according to Benzinga Pro.

Benzinga Edge Stock Rankings awarded Nvidia an impressive growth score of 94.84%. Click here to compare it with other leading tech firms like Alibaba and Tencent.

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