Nvidia has ordered 300,000 H20 AI chipsets from Taiwan Semiconductor Manufacturing Company (TSMC), responding to robust demand in China now that U.S. export restrictions have been lifted. This order boosts Nvidia’s China-bound inventory to nearly 900,000 units, a strategic restock after previously relying on existing supplies of 600,000–700,000 H20 chips.
Why It Matters
The H20 chip is a throttled version of Nvidia’s flagship H100, tailored to comply with U.S. export controls. Though less powerful than H100 or Blackwell chips, it supports AI inference workloads and retains Nvidia’s CUDA ecosystem—features that make it highly attractive for Chinese cloud providers and tech companies.
Despite the chip’s compliance tuning, it reportedly outperformed H100 in some inference scenarios, making it a smart compromise in restricted markets.
Timeline & Stockpile Strategy
- New order: 300,000 H20 chipsets from TSMC, added to existing inventory.
- Total inventory: Expected to reach 900,000 chips.
- Background stock: Previously relied on 600,000–700,000 units to meet Chinese demand.
- Sales in 2024: Nvidia sold approximately 1 million H20 chips to Chinese buyers.
Nvidia CEO Jensen Huang indicated that restarting production beyond current inventory would take about nine months, depending on continuing demand. Export licenses remain pending; the U.S. Commerce Department has not confirmed approvals but is expected to grant permission soon.Reuters
Stock & Market Reaction
Following the news, Nvidia’s shares hit multiple record highs, though they later retraced slightly. Analysts forecast meaningful revenue growth from resumed H20 sales in coming quarters.
Key market insights:
- Investor optimism stems from Chinese demand resuming after earlier ban.
- Jefferies and Wedbush analysts project earnings per share targets rising significantly with renewed chip sales.
Market Implications & Risks
- China demand rebound: The order reflects surging need from cloud firms like Tencent, Alibaba, and ByteDance. Relied on the H20 during the ban when no supply of H100 or Blackwell chips was permitted.
- Geopolitical sensitivity: While the U.S. administration relaxed policy, some national security experts continue to push for restrictions on H20, citing strategic concerns over inference capabilities.
- Supply constraints: TSMC production lead times (~9 months) and rising demand may limit Nvidia’s ability to scale quickly if approval delays or demand spikes further.
