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Nvidia (NVDA, Financials) is scouting locations in Shanghai for a new research and development center to preserve its market foothold in China after U.S. export restrictions sharply reduced its chip sales.
Nvidia began exploring sites in Shanghai's Minhang and Xuhui districts earlier this year, sources told Reuters. The push accelerated after CEO Jensen Huang's surprise visit to China in April, during which he met Vice Premier He Lifeng and Shanghai Mayor Gong Zheng.
The move comes weeks after the U.S. imposed new restrictions on the H20 chip, the only Nvidia AI processor approved for China. Nvidia plans to release a downgraded version of the chip within two months to recover lost ground against domestic rivals like Huawei.
China contributed $17 billion in revenue in Nvidia's fiscal year ending Jan. 26, accounting for 13% of total sales. That figure has halved since U.S. export curbs began in 2022, the company said in a February earnings call.
Shanghai authorities have reportedly offered tax breaks and land incentives to support the R&D effort, although neither the company nor the city has confirmed the plans publicly.
Huang told CNBC China's AI market could grow to $50 billion within 23 years and called exclusion from it a tremendous loss.
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This article first appeared on GuruFocus.