[News] NVIDIA May Raise H20 Prices to Shield Profits but Confronts China’s Domestic Chip Push

NVIDIA and AMD have obtained U.S. approval to export their H20 and MI308 chips to China, but the licenses require them to hand over 15% of their China revenues to the U.S. government. To offset the impact, NVIDIA is said to be preparing an up to 18% price hike on its H20 AI chips, according to Wccftech.

An analyst cited in the report noted that NVIDIA intends to pass the cost of its deal with President Trump on to Chinese customers. If the H20 price hike is implemented, it will likely compress gross profit margins, though overall profitability in the region is expected to remain steady, the report adds.

Margin Outlook

Wall Street currently expects NVIDIA’s gross margin to reach 71% in 2026. If the company raises H20 prices by 18% to preserve profit dollars, its H20 business margin would fall from 71% to 60%. With H20 estimated to account for 15% of revenue, NVIDIA’s overall margin would decline from 71% to 69.3%, as analyst cited by MoneyDJ notes.

The decline in gross margin is unlikely to have a major impact on NVIDIA, as price hikes could help preserve overall profit. According to Fudzilla, however, the reported H20 price increase may squeeze margins and weaken bargaining power for AI server manufacturers like Taiwan’s Inventec and MiTAC, which assemble servers for Baidu, Alibaba, Tencent, and ByteDance. Higher chip costs could also make some customers hesitate before signing new deals, the report notes.

If NVIDIA Hikes H20 Prices, What Stands in the Way

Meanwhile, if NVIDIA moves forward with raising H20 prices in China, it will still face certain challenges. According to Wccftech, one obstacle is a regulatory investigation by Chinese authorities into whether its chips entering the country contain security backdoors, amid broader concerns over information security risks that could influence purchasing decisions or slow adoption of the H20.

In addition, Chinese authorities are stepping up pressure on domestic firms to adopt local chips, a trend that could weaken demand for NVIDIA’s H20, EE Times China highlights. Reuters, citing sources, reports that the Cyberspace Administration of China has summoned companies including Tencent, ByteDance, and Baidu to justify their H20 purchases, adding further pressure to NVIDIA’s price-hike plans.

NVIDIA’s Potential Next Chips for the Chinese Market

Regarding Team Green’s other plans in the Chinese market, Reuters notes that NVIDIA is reportedly developing a China-focused AI chip based on its Blackwell architecture, tentatively called the B30A, designed to outperform the H20—the most advanced model it can currently sell in China.

Read more

• [News] NVIDIA Reportedly Develops China-Focused Blackwell AI Chip, with Test Samples Possibly in Sep.
• [News] NVIDIA, AMD Make Historic Deal: Reportedly Pay 15% of China Sales for H20, MI308 Export Licenses
• [News] China Reportedly Questions Tencent, ByteDance on Buying NVIDIA H20 Instead of Domestic Chips

(Photo credit: NVIDIA)