Nvidia has reportedly placed a significant order for H20 chipsets with contract manufacturer Taiwan Semiconductor Manufacturing Company (TSMC) last week. News agency Reuters report that this move signals a change in strategy, citing sources as saying that strong Chinese demand has prompted Nvidia to increase production rather than solely rely on its existing stockpile.The report said that Nvidia has ordered TSMC to manufacture 300,000 H20 chips that will add to the US chipmaker’s current inventory of 600,000 to 700,000 H20 chips. For context, US research firm SemiAnalysis estimates Nvidia sold approximately 1 million H20 chips in 2024.Nvidia has also reportedly requested that Chinese companies interested in purchasing the H20 chips submit new documentation, including client order volume forecasts.
Why Nvidia’s latest H20 AI chip order for China is important
Firstly, this order comes after the Trump administration reversed an effective April ban earlier this month, allowing Nvidia to resume sales of its H20 graphics processing units (GPUs) to China. The initial ban was implemented to restrict advanced AI chip access to Chinese entities, citing national security concerns.Crucially, Nvidia requires export licenses from the US government to ship these H20 chips. While the company stated in mid-July it had received assurances from authorities regarding expedited approvals, the US Commerce Department has yet to officially approve these licenses, according to multiple sources cited by Reuters. Nvidia specifically developed the H20 for the Chinese market following broader US export restrictions imposed on its more powerful AI chipsets like the H100 and the new Blackwell series, which are sold in other global markets.Nvidia CEO Jensen Huang had previously stated this month during a visit to Beijing that the decision to restart H20 production would hinge on order volumes, noting that reactivating the supply chain would take about nine months. Prior to the April ban, major Chinese tech firms including Tencent, ByteDance, and Alibaba significantly increased their H20 orders, deploying them for cost-effective AI models like DeepSeek’s, as well as their own.
