Strong demand for Nvidia's H20 chips in China prompts an order of 300,000 units from TSMC, according to inside sources.
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Nvidia is ramping up production of its H20 chipsets with Taiwan Semiconductor Manufacturing Company (TSMC) due to strong and rising demand from the Chinese market following a recent easing of U.S. export restrictions that had previously banned advanced AI chip sales to China.
The H20 chips were specifically designed for China, with reduced computing power compared to Nvidia’s higher-end models sold elsewhere, allowing compliance with U.S. export control limits while still meeting Chinese AI development needs.
Nvidia has placed an order for 300,000 additional H20 units with TSMC, which will increase their inventory to about a million chips (up from the existing 600,000 to 700,000 units). This substantial order expansion reflects Nvidia’s strategic response to strong Chinese demand that emerged after the U.S. government reversed its previous ban on H20 chip exports in early July 2025.
However, Nvidia still requires authorization from the U.S. Department of Commerce to ship these H20 chips legally to China. Although the U.S. government has committed to providing these export licenses soon, as of late July 2025, the licenses have not yet been approved. Nvidia has requested Chinese companies interested in purchasing the H20 to submit new orders and forecast volumes, while awaiting final license approval before commencing full-scale shipments.
The resumption of H20 sales has drawn bipartisan condemnation from U.S. legislators concerned about China's access to the H20 impeding U.S. efforts in AI technology. Nvidia and others argue that it is important to retain Chinese interest in its chips to prevent developers from completely switching over to offerings from rivals like Huawei.
In the past, Chinese technology giants including Tencent, ByteDance, and Alibaba substantially increased H20 orders before the April ban. Nvidia sold around 1 million H20 chips in 2024, according to U.S. research firm SemiAnalysis. Despite the availability of less powerful offerings from Huawei, the popularity of Nvidia products in China persists.
Nvidia CEO Jensen Huang stated that the level of H20 orders would determine whether production would begin again, and any restart would take nine months. The company declined to comment on the new orders or the status of license applications. The U.S. Commerce Department did not respond to a request for comment.
This situation highlights ongoing U.S.-China technology trade tensions, with Nvidia navigating regulatory complexities to serve the Chinese AI market while complying with export controls.
- The increased demand from the Chinese market for Nvidia's H20 chipsets warrants an analysis of the overall impact on the global technology, finance, and fintech industries.
- The energy consumption and data-and-cloud-computing needs of the growing industry market for AI chips, such as Nvidia's H20, are becoming more significant, influencing business strategies in the energy sector.
- The strategic response of Nvidia to the strong Chinese demand for the H20 chips impacts the live stock markets, as investors await regulatory approvals and forecast the potential growth in exports.
- Despite bipartisan condemnation by U.S. legislators, the subscription-based business model of Nvidia might benefit from the renewed demand from Chinese companies.
- As the demand for the H20 chips rises, the Chinese semiconductor industry will have to adapt to this increased competition, testing their resilience in the markets.
- The U.S. Department of Commerce's decision to authorize the shipment of H20 chips will have far-reaching consequences for both industries, influencing future trade policies.
- The H20 chip, designed specifically for China, demonstrates the importance of catering to local market needs, a key strategy in the global trade industry.
- China's AI development depends on the H20 chip, and the lack of these crucial components could potentially slow down the growth of the industry, affecting exports and overall economic performance.
- The ongoing technology trade tensions between the U.S. and China are raising concerns about the future of AI development, with artificial intelligence becoming an increasingly significant factor in the global economy and markets.
