Chipmaker Nvidia (NVDA) is reportedly redesigning some of its AI chips so they can still be sold to Chinese companies without breaking U.S. export rules, according to The Information. The company has shared these plans with major Chinese customers, including Alibaba (BABA), ByteDance (the parent company of TikTok), and Tencent (TCEHY). CEO Jensen Huang told customers about the new strategy during his trip to Beijing in mid-April, which happened just after the U.S. placed new restrictions on exporting Nvidia’s H20 AI chips to China.
These export limits could cost Nvidia $5.5 billion, as the restricted H20 was the main chip it was still allowed to sell in China. To get around this issue, Nvidia told customers that samples of its redesigned chip could be ready as soon as June. The company also said that it is working on a special version of its latest-generation Blackwell AI chip made specifically for the Chinese market in order to stay within U.S. rules.
Unsurprisingly, selling AI chips to China has become a sensitive and challenging issue. U.S. officials want to limit China’s access to powerful AI technology, so Nvidia has started making chips designed to meet those restrictions without losing its Chinese customers. While Nvidia did not comment on the report, the situation shows the tough task Nvidia has of following U.S. laws while protecting its business in a key market.
Is NVDA a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 35 Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $165.22 per share implies 45.2% upside potential.
