Nvidia (NVDA, Financial) is preparing to launch a modified version of its H20 artificial intelligence chip for the Chinese market within the next two months, according to a Thursday Reuters report.

The revised chip is expected to have reduced memory capacity and other performance adjustments to comply with U.S. regulations that limit China's access to advanced semiconductor technology.

China accounted for about 13% of Nvidia's total sales in the fiscal year that ended in January 2025. CEO Jensen Huang visited Beijing last month, highlighting the importance of the region to the company's long-term growth.

The H20 chip is widely used by Chinese tech giants like Baidu (BIDU, Financial) and Alibaba (BABA, Financial) as well as smaller firms like DeepSeek. However, the reduced capabilities of the modified chip could benefit local rivals like Huawei.

The U.S. export controls are part of a broader strategy to maintain a technological edge in critical sectors like artificial intelligence.

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