Nvidia Boosts H20 Chip Orders Amid Surging Chinese Demand

Nvidia has placed orders for 300,000 H20 chipsets with TSMC to meet soaring Chinese demand, reversing its decision to rely solely on existing stockpiles. The increased demand is driven by China's lifting of export restrictions on H20 chips. Nvidia had developed the H20 specifically for the Chinese market after the US imposed export restrictions on its other AI chipsets.

Nvidia (NVDA) has placed an order for 300,000 H20 chipsets with Taiwan Semiconductor Manufacturing Co. (TSM), aiming to meet the surging demand for its AI chips in China. The order follows China's lifting of export restrictions on the H20 chips, which were previously banned under U.S. export controls. The H20 chips were developed specifically for the Chinese market to comply with U.S. restrictions on other AI chipsets.

The order, announced in a Reuters report, adds to Nvidia's existing stockpile of 600,000 to 700,000 H20 chips. Sources familiar with the matter attribute the additional order to strong Chinese demand for the chips. Nvidia's spokesperson declined to comment, while TSMC did not immediately respond to requests for comment.

Shares of Nvidia were little changed shortly after the opening bell on Tuesday but have increased in value by nearly a third in 2025. The company's stock performance reflects the market's optimism about the resumption of sales in China and the potential growth in demand for AI chips.

The decision to resume sales of H20 chips in China follows a recent meeting between Nvidia CEO Jensen Huang and U.S. President Donald Trump, during which the Trump administration assured Nvidia that licenses would be granted. This reversal of the earlier ban comes amidst heightened scrutiny of business dealings between U.S. tech companies and China, particularly in the realm of advanced technology.

While the order signals a positive turn for Nvidia's sales in China, it also raises concerns about potential security risks associated with the H20 chips. China's cyberspace regulator has summoned Nvidia to explain the security risks, including potential vulnerabilities and backdoors, associated with its H20 chips sold to China. The regulator expressed concerns about the chips' tracking technology, which could pose security threats.

Nvidia will need to address these concerns to ensure the continued sale of its H20 chips in China. The company's response will be crucial in determining whether the black market for Nvidia's advanced AI chips will continue to thrive or if the company can successfully navigate the regulatory landscape.

References:
[1] https://www.investopedia.com/nvidia-orders-300-000-ai-chips-as-sales-expected-to-resume-in-china-11780814
[2] https://www.asiafinancial.com/cadence-and-nvidia-dealings-in-china-drawing-close-scrutiny