Nvidia’s new chip aims to soften tariff blow ahead of key earnings
Nvidia is moving quickly to protect its position in China with the launch of a new AI chip – a stripped down, cheaper product aimed at dodging tightening US export restrictions and softening the blow of escalating trade tensions.
Set to begin mass production as early as next month, the chip will be based on one of Nvidia’s previous products, and will be built with less advanced components to meet US requirements, Reuters first reported.
Priced between $6,500 and $8,000 – far below the model it replaces – the new GPU falls just within the memory bandwidth limits set by Washington’s latest rules.
The design sidesteps cutting edge packaging from TSMC, and uses conventional memory capacity as part of a broader strategy to regain access to China’s $50bn data centre market.
The move highlights the chip giant’s attempt to shield itself from the growing fallout of US trade policy.
Since 2022, Nvidia’s market share in China has fallen from 95 per cent to 50 per cent, and the recent block on H20 exports forced it to write off $5.5bn in inventory and miss out on $15bn in potential sales.
Chief executive Jensen Huang called the controls a “failure”, warning they risk handing long term advantage to Chinese competitors like Huawei.
Anticipated earnings
The chip roll-out also comes just days before Nvidia reports its first quarter earnings on Wednesday, a release many on Wall Street will treat as a referendum on the firm’s resilience in a volatile climate.
Analysts expect the tech heavyweight to post earnings of 73 cents a share on $43.4bn in revenue, up 66 per cent from a year ago.
Still, that earnings per share (EPS) estimate has dropped from 93 cents just 60 days ago, reflecting caution around trade tensions and growing AI competition from rivals like China’s DeepSeek.
While Nvidia stock has rebounded 36 per cent since its April lows, driven by optimism over Trump delaying 50 per cent tariffs until July, it remains below January highs.
Russ Mould, AJ Bell’s investment director, said he was “doubtless” that investors will be looking out for guidance from Huang on whether Nvidia can continue navigating export restrictions while fending off lower-cost competitors.
“Trump’s tariffs and trade policies are blotting out many other issues right now, but this one is yet to go away.”
“Nvidia did offer fairly cautious guidance for the first quarter, which runs from February to April, but it has had the happy knack of beating estimates for the quarter,” he added.