Nvidia is ramping up production of its H20 AI chip, placing a massive order for 300,000 units with its manufacturing partner, TSMC. This move comes after the Trump administration reversed an earlier ban and gave Nvidia the green light to resume selling the chip to China.
The H20 was designed specifically for the Chinese market after the US imposed strict export controls on more powerful AI chips in late 2023. While not as powerful as Nvidia’s top-of-the-line models, it’s still highly sought after in China.
This new order is a significant shift in strategy for Nvidia. The company’s CEO, Jensen Huang, recently suggested that Nvidia would rely on its existing stockpile of H20 chips. However, according to sources, unexpectedly strong demand from Chinese tech giants such as Tencent and Alibaba has prompted the company to restart production.
This decision puts Nvidia in a tricky position. The Trump administration’s reversal on the ban drew sharp criticism from U.S. lawmakers, who worry that granting China access to even these less powerful AI chips could erode America’s technological lead. However, Nvidia argues that it’s crucial to keep Chinese developers using its software and tools, or they might switch completely to homegrown rivals like Huawei.
For now, the orders are placed, but Nvidia still needs to get the final export licenses from the US government. The company has instructed its Chinese customers to submit new paperwork in preparation for shipments, a clear indication that it expects to receive the approvals soon.
