Nvidia Orders 300,000 Additional H20 Chips from TSMC Amid Strong China Demand

Nvidia has ordered 300,000 additional H20 AI chips from Taiwan Semiconductor Manufacturing Co. due to unexpectedly strong demand in China. The company initially halted production of the chip and told customers it had limited inventory, but the new order will supplement Nvidia's existing stockpile of 600,000-700,000 H20 chips. The H20 is a customized AI chip designed to comply with US export controls and serve Nvidia's Chinese clients without violating trade regulations. The US Department of Commerce has yet to issue final export licenses for the H20, but Nvidia has reportedly been assured they are forthcoming.

Nvidia (NASDAQ:NVDA) has placed a fresh order for 300,000 H20 AI chips with Taiwan Semiconductor Manufacturing Co (TSMC) (TW:2330) to meet surging demand from China, Reuters reported [1]. The move comes after the Trump administration lifted a ban on the sale of the H20 to Chinese customers, allowing Nvidia to resume sales of the AI chip in the region.

The new order will supplement Nvidia's existing inventory of 600,000 to 700,000 H20 chips [2]. The H20 is a customized AI chip designed to comply with U.S. export controls and serve Nvidia's Chinese clients without violating trade regulations. Despite the recent lift in restrictions, the U.S. Department of Commerce has yet to issue final export licenses for the H20, but Nvidia has reportedly been assured they are forthcoming [2].

The H20 chip was developed specifically for the Chinese market after the U.S. imposed export restrictions on its more advanced AI processors in late 2023. Compared to Nvidia's high-end H100 and the newer Blackwell series available globally, the H20 offers reduced computing power to comply with U.S. trade rules [2]. The H20's return comes as Washington negotiates with Beijing over critical minerals and as lawmakers raise concerns over AI security.

The decision to resume sales of the H20 has sparked a debate among national security experts. A group of 20 experts wrote a letter to the U.S. Department of Commerce secretary, urging the administration to reconsider the decision, citing potential threats to U.S. national security and AI technological edge [3, 4]. The experts argued that the H20 is not an outdated AI chip but rather a "potent accelerator of China's frontier AI capabilities," outperforming even the H100 in inference tasks [4].

Nvidia's move to increase production of the H20 chip reflects its strategy to cater to the growing demand in the Chinese market. However, the company's actions also highlight the complex balance between trade relations and national security concerns in the rapidly evolving field of artificial intelligence.

References:
[1] https://www.investing.com/news/stock-market-news/nvidia-orders-300000-h20-chips-as-china-demand-surges-reuters-reports-4156369
[2] https://seekingalpha.com/news/4473063-nvidia-ordered-300k-h20-chips-from-taiwan-semiconductor-last-week---report
[3] https://techcrunch.com/2025/07/28/20-national-security-experts-urge-trump-administration-to-restrict-nvidia-h20-sales-to-china/
[4] https://theoutpost.ai/news-story/national-security-experts-urge-trump-administration-to-reconsider-nvidia-h20-chip-exports-to-china-18306/