(Yicai) July 5 --  US chip giant Nvidia will sell around USD12 billion worth of artificial intelligence chips in the Chinese market this year, according to a report by SemiAnalysis, a research and analysis firm focusing on the semiconductor and AI industries.

Nvidia will likely deliver over 1 million custom H20 chips in China in the next few months, with designs that are not subject to US restrictions on selling AI processors to Chinese customers, the report released yesterday showed. Each H20 chip costs between USD12,000 and USD13,000.

Custom H20 chips are expected to maximize Nvidia's business in China, Jensen Huang, founder and chief executive of the California-based firm, previously noted.

Chinese consumers thought the H20 chip's performance was restricted when they were first launched in the country, industry insiders told Yicai. However, subsequent tests showed that the chips have an advantage considering their price.

The manufacturing cost of the H20 chip will be higher than that of the H100 because of the larger memory, but it will cost about half of the H100, Dylan Patel, founder of SemiAnalysis, previously said. Nvidia has made compromises in related profit margins, he pointed out.

The recent scale of Nvidia's businesses in China was far below that in the past, Huang said on an earnings conference call in May. The firm is facing increasingly fierce market competition in the country due to technology restrictions, he noted.

Chinese tech giants, including ByteDance, Tencent Holdings, and Alibaba Group Holding, are speeding up the building of generative AI capabilities, requiring many chips for computing power.

Nvidia's revenue from its business in China was around USD10.3 billion in the 12 months ended Jan. 31, accounting for around 17 percent of its total. The ratio will fall to just 10 percent this year if the firm logs income of about USD100 billion, while the figure made up around a fourth of the total before 2021.

Editor: Martin Kadiev