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CEO Jensen Huang underlined China's importance during

April

visit

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Shanghai could offer incentives for Nvidia ( NVDA ) project

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Shanghai may provide large area of land for R&D centre

By Julie Zhu and Clare Jim

HONG KONG, May 16 (Reuters) - Nvidia ( NVDA ) is seeking

a site in Shanghai for a research and development centre, three

sources close to the matter said, reflecting the strategic

significance of the Chinese market where U.S. curbs on advanced

chip exports have hit sales.

The U.S. chipmaker began the search in early 2025 and is

primarily evaluating locations in Shanghai's Minhang and Xuhui

districts, one of the sources said.

The project gained momentum after a surprise visit to China

by Nvidia ( NVDA ) CEO Jensen Huang last month, said two of the sources.

Huang, who has consistently said China is critical to

Nvidia's ( NVDA ) growth, made his visit immediately after the U.S.

placed new restrictions on China-bound shipments of its H20

chips, the only AI chip the company can sell legally in China.

Huang met senior Chinese officials, including Vice Premier

He Lifeng and Shanghai's mayor Gong Zheng.

Reuters reported earlier this month that Nvidia ( NVDA ) plans to

release a downgraded version of the H20 chip for China in the

next two months, as it seeks to prop up sales in the country,

where it has been lost market share to domestic rivals such as

Huawei.

China generated $17 billion in revenue for Nvidia ( NVDA ) in the

fiscal year ending January 26, accounting for 13% of the

company's total sales.

The local government of Shanghai, which hosts China's

largest foreign business community, including firms such as

Tesla, has expressed willingness to offer incentives

for the Nvidia ( NVDA ) project, including tax reductions, said two of

the sources.

The local authorities are also considering offering a

substantial amount of land to Nvidia ( NVDA ) for its China R&D centre,

one source added.

Nvidia ( NVDA ) declined to comment, while the Shanghai city

government did not immediately respond to a request for comment.

The sources declined to be named, as the plan is not public.

Following his visit to China, Huang told CNBC that the

country's AI market could reach approximately $50 billion within

the next two-to-three years.

He said that being excluded from this rapidly expanding

sector would represent a "tremendous loss" for Nvidia ( NVDA ),

especially as competition with Huawei intensifies.

During an earnings call in February, before H20 chip sales

to China were restricted, Nvidia ( NVDA ) executives said the company's

sales to China were about half the level before U.S. export

controls.

Since 2022, the U.S. government has imposed restrictions on

the export of Nvidia's ( NVDA ) most advanced chips to China, citing

concerns over potential military applications.

The Financial Times first reported on Friday about Nvidia's ( NVDA )

plan to build a R&D centre in China.