Nvidia has placed orders for 300,000 H20 chipsets with Taiwan’s TSMC, driven by strong demand from China, according to sources familiar with the matter.
Why it matters: This decision comes after the Trump administration allowed Nvidia to resume sales of H20 graphics processing units (GPUs) to China, reversing a previous ban intended to limit China’s access to advanced AI chips due to national security concerns.
The details:
- The H20 chip was specifically developed for the Chinese market after the U.S. imposed export restrictions on Nvidia’s other AI chipsets in late 2023.
- The new orders will add to Nvidia’s existing inventory of 600,000 to 700,000 H20 chips.
- Nvidia sold around 1 million H20 chips in 2024, according to U.S. research firm SemiAnalysis.
- Export licenses from the U.S. government are required for Nvidia to ship the H20 chips, which have yet to be approved by the U.S. Department of Commerce.
The resumption of H20 sales to China is part of broader negotiations related to rare earth magnets, crucial elements for many industries, whose exports Beijing had limited amid escalating trade tensions.
What they’re saying:
- “The volume of H20 orders would determine whether production would resume. Restarting the supply chain could take up to nine months,” said Nvidia CEO Jensen Huang during a recent trip to Beijing.
- The decision has met with bipartisan criticism from U.S. legislators concerned about maintaining the country’s lead in AI technology.
The other side: Nvidia and others argue that retaining Chinese interest in its chips is vital to prevent developers from switching to competing products from companies like Huawei.
What’s next: The U.S. Commerce Department, TSMC, and Nvidia declined to comment on the new orders or the status of the license applications. The demand for repair services for Nvidia’s other banned GPUs highlights their continued value in the market.