SINGAPORE Nvidia is working on a version of its new flagship AI chips for the China market that would be compatible with current US export controls, four sources familiar with the matter said.

The AI chip giant in March unveiled its "Blackwell" chip series, which is due to be mass-produced later in the year. The new processors combine two squares of silicon the size of the company's previous offering. Within the series, the B200 is 30 times speedier than its predecessor at some tasks like serving up answers from chatbots.

Nvidia will work with Inspur, one of its major distributor partners in China, on the launch and distribution of the chip which is tentatively named the "B20", two of the sources said. Shipments of the "B20" are planned to start in the second quarter of 2025, a separate source told Reuters.

The sources declined to be identified as Nvidia has yet to make a public announcement.

A spokesperson for Nvidia declined to comment. Inspur did not respond to requests for comment.

Shares of Nvidia rose 1.4% to US$119.67 in US pre-market trading after publication of the Reuters story.

Washington tightened its controls on exports of cutting-edge semiconductors to China in 2023, seeking to prevent breakthroughs in supercomputing that would aid China's military.

Since then, Nvidia has developed three chips tailored specifically for the Chinese market.

The advent of tighter export US controls has helped Chinese technology giant Huawei and startups like Tencent-backed Enflame make some inroads into the domestic market for advanced AI processors.

A version of a chip from Nvidia's Blackwell series for the Chinese market would boost the US firm's efforts to fend off those challenges.

China accounted for around 17% of Nvidia's revenue in the year to end-January in the wake of US sanctions, sliding from 26% two years earlier.

Nvidia's most advanced chip for the China market, the H20, initially got off to a weak start when deliveries began this year and the US firm priced it below a rival chip from Huawei, Reuters reported in May.

But sales are now growing rapidly, two of the sources said.

Nvidia is on track to sell over one million of its H20 chips in China this year, worth upwards of US$12 billion , according to an estimate from research group SemiAnalysis.

Expectations are high that the US will continue to keep up the pressure on semiconductor-related export controls.

The US wants the Netherlands and Japan to further restrict chipmaking equipment to China, sources have said.

The Biden administration also has preliminary plans to place guardrails around the most advanced AI Models, the core software of artificial intelligence systems like ChatGPT, sources have said.

Chip stocks globally tumbled last week after Bloomberg News reported that Biden's administration was weighing a measure called the foreign direct product rule that would allow the US to stop a product from being sold if it was made using American technology.

  - Reuters