Sources reveal that NVIDIA (NASDAQ: NVDA) is developing a new flagship AI chip for the Chinese market, compliant with current US export controls. The company will collaborate with China's major wholesale partner, Inspur Group (SHA: 600756), to launch and mass-produce the "B20" chip.

NVIDIA's spokesperson declined to comment, and Inspur Group did not respond to requests for comment.

Since the US intensified export controls on high-end semiconductors to China in 2023, NVIDIA has developed three custom chips specifically for the Chinese market.

Although these restrictions have had some success in terms of national security, they have also indirectly protected Chinese chip manufacturers such as Enflame Technology (invested in by Huawei and Tencent) from the impact of NVIDIA's technological advantage. In recent years, Chinese chip manufacturers have made some progress in the domestic high-end AI processor market.

NVIDIA's Blackwell series chip, the B20, is designed specifically for the Chinese market and is expected to help NVIDIA compete with Chinese companies such as Huawei in China. As of the end of January, the Chinese market accounted for about 17% of NVIDIA's revenue, a significant decrease from 26% two years ago.

According to a May report, despite being priced lower than Huawei's chips, NVIDIA's most advanced chip in China, the H20, performed poorly when deliveries began earlier this year. However, two insiders have indicated that sales of the H20 are now growing rapidly.

According to research firm SemiAnalysis, NVIDIA expects to sell more than one million H20 chips in China this year, with a total value exceeding $12 billion.