Nvidia strengthens China presence with new Shanghai research centre

Nvidia is moving forward with plans to establish a research-and-development centre in Shanghai, in a strategic effort to reinforce its position in China despite tightening U.S. export restrictions targeting its advanced AI semiconductors.

The move comes as part of the chipmaker's efforts to remain competitive in one of its most important foreign markets while staying compliant with U.S. trade regulations, Caliber.Az reports, citing the latest Wall Street Journal material.

According to people familiar with the matter, Nvidia CEO Jensen Huang visited China in April and discussed the proposed Shanghai facility with the city’s mayor, who welcomed the initiative and offered municipal support. Local authorities reportedly promised incentives, including tax breaks and streamlined administrative procedures, to facilitate the project.

The planned R&D centre will focus on strengthening Nvidia’s ability to assess and respond to the needs of Chinese customers. By gathering and relaying feedback to its U.S. headquarters, the company aims to develop products that not only appeal to the Chinese market but also meet U.S. export control requirements. Nvidia is currently looking to lease office space in Shanghai to house both existing employees and new hires for the project.

The initiative underscores Nvidia's efforts to adapt to export controls imposed by Washington since 2022, which require special licenses for sending its most advanced AI chips to China. These restrictions have had a notable impact on Nvidia’s Chinese business. Sales in China dropped to 13% of the company’s total revenue in its most recent fiscal year, down from 26% before the measures took effect.

In response, Nvidia has repeatedly released downgraded versions of its AI chips tailored to comply with evolving U.S. regulations, a strategy that has drawn criticism from some U.S. officials who argue it undermines efforts to curb China’s technological advancement in the AI sector.

The company insists it is adhering to U.S. export laws. “We are not sending any GPU designs to China to be modified to comply with export controls,” an Nvidia spokesperson stated. The representative also emphasised, “We are not redesigning any chips at any location in China.”

Nevertheless, Nvidia has reportedly informed major Chinese clients that it plans to reduce the performance of its latest AI chip, the H20, recently added to Washington’s export control list—so that it can meet the revised regulatory thresholds. It has also begun developing a new chip based on its cutting-edge Blackwell architecture, aiming to ensure compliance. However, any such designs will still require U.S. government approval, as the final details of the updated export restrictions are currently being finalised.

Despite the regulatory headwinds, Nvidia continues to have a substantial footprint in China, employing roughly 4,000 people, about half of whom are based in Shanghai. Many of these engineers contribute to global development projects and research in advanced fields, such as autonomous driving.

Nvidia has defended its continued engagement with the Chinese market, arguing that selling to Chinese customers under lawful conditions is preferable to allowing local competitors like Huawei Technologies to fill the gap left by American companies.

By Tamilla Hasanova