Nvidia has ordered 300,000 of its H20 chipsets from Taiwan Semiconductor Manufacturing Company (TSMC), amid a resurgence in Chinese demand for the AI chips.
Two unnamed sources revealed the order, with one noting that Nvidia had initially intended to rely on its existing inventory but changed its stance due to market signals.
U.S. Export Policy Reversal
Earlier this month, the Trump administration reversed a ban on H20 chip exports to China, initially implemented in April to curb China’s access to advanced U.S. AI technology.
Nvidia designed the H20 specifically for the Chinese market after export restrictions blocked its other high-performance chips in late 2023.
Although H20 chips are less powerful than the H100 and Blackwell series, they remain valuable for AI development within China.
Production and Inventory Details
The new order will add to an existing stockpile of between 600,000 to 700,000 chips.
Nvidia sold approximately one million H20 chips in 2024, according to research firm SemiAnalysis.
CEO Jensen Huang stated during a trip to Beijing that the company would resume production only if order volumes justified it.
Restarting the supply chain would take up to nine months.
Uncertain Export Licenses
Despite assurances in mid-July that it would receive the required export licenses, Nvidia has yet to secure them, according to two sources.
The U.S. Commerce Department has not commented on the current status.
Nvidia has reportedly asked prospective Chinese buyers to submit new documentation, including client order forecasts.
Neither Nvidia nor TSMC commented on the recent developments.
Strategic Importance of H20
The H20 chip has become central to U.S.-China technology negotiations.
The Trump administration’s decision to resume exports was tied to ongoing discussions about rare earth exports from China.
The move drew criticism from U.S. lawmakers concerned that allowing H20 access could erode America’s AI lead.
Market Demand and Competitive Landscape
Despite local alternatives like Huawei’s chips, Nvidia’s offerings remain highly sought after in China.
Before the export ban, major firms like Tencent, ByteDance, and Alibaba increased their H20 orders, deploying cost-efficient models like DeepSeek.
Even after restrictions, black-market demand for banned GPUs led to a surge in repair requests for older Nvidia products.
Nvidia warned in April that the ban could force it to write off $5.5 billion in inventory and miss out on $15 billion in sales.
CEO Jensen Huang emphasized in a podcast that maintaining Chinese interest in Nvidia’s ecosystem is vital to preventing a shift to rival platforms.
The ongoing export license approval process remains a critical factor in determining how this strategic chip deal plays out.