China's Appetite for Nvidia H20 AI Chips Expands
Nvidia developed the H20 to compete with Huawei, a chipmaker based in China. The US bars companies from selling US technology to Huawei. That approach appears to have been successful at slowing Huawei's progress in developing critical technology, but also makes it hard for China to turn anywhere else for chips. Nvidia has warned that software developers could switch to Huawei chips if they don't have access to Nvidia's chips and software tools.
The H20 is much slower than Nvidia's H100 and H200 AI chips, which are available to customers outside China. Last year, Elon Musk used 100,000 H100 chips to create an impressive training cluster for xAI's Grok.
Credit: Nvidia
As NPR noted, the H20's fate was uncertain earlier this year, when it appeared the Trump administration was considering whether to ban or limit sales to China, the only major market for the slower chip. The administration later decided not to add restrictions to the H20, allowing Nvidia to sell its chip in China. The move is a boon both for Nvidia, which designed the chip, and for Taiwan-based TSMC, which manufactures the H20 for Nvidia.
While Nvidia sold an estimated 1 million H20s in 2024, it could be on track to sell more this year. The company is believed to already have as much as 700,000 in inventory and has placed an order with TSMC for another 300,000. According to Reuters, Nvidia CEO Jensen Huang had indicated earlier that Nvidia would order more chips if the demand was there, and apparently, it is.
China represents an important market for Nvidia, but the US has attempted to prevent the country from getting cutting-edge technology, wary of China's military. On top of those concerns, the US and China have been tangled in a trade war. Semiconductors largely avoided tariffs that affected many other products initially, but tariffs have fluctuated, and uncertainty has caused headaches for many US companies that do business with China.
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