NVIDIA needs 300,000 more H20 AI chips from TSMC to meet China’s demand — but some security experts aren’t happy

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NVIDIA is swiftly advancing its position, aiming to maintain its status as the leading global provider of artificial intelligence (AI) processors and the world’s top-valued corporation.

Recently, I was thrilled to learn that as of July 14, NVIDIA has resumed selling its H20 AI GPUs back to China. This is fantastic news, as it signifies the lifting of the White House ban that had been in effect since April 2025. I can’t wait to see how this development will contribute to the advancement of AI technologies in China!

Currently, according to reports from Reuters, NVIDIA is hurriedly working to fulfill the unexpected surge in demand for their H20 GPUs in China, after the recent lifting of the ban.

Although unnamed sources claim that NVIDIA possesses between 600,000 and 700,000 H20 chips, they have still decided to order an additional 300,000 chips from TSMC.

Based on Jensen Huang, NVIDIA’s CEO, stating this month that H20 production would only restart when there was sufficient order volume for their chips, it seems that the demand NVIDIA is facing is quite high.

According to a Reuters article, it’s projected that NVIDIA might have sold around 1 million H20 chips by the year 2024. Given that Huang predicts up to nine months for the supply chain to recover, it’s possible that TSMC’s production numbers will keep rising as more orders from NVIDIA pour in.

It appears that NVIDIA is encountering resistance from the U.S. Department of Commerce regarding their H20 chips. At this point, export permits for these chips have not been granted, as reported by Reuters. Nonetheless, there are indications that approval might be imminent.

Why are NVIDIA’s H20 AI chips so popular in China?

In response to the U.S. government’s restriction on selling the top-tier Hopper H100, H200, and Blackwell B200 GPUs, NVIDIA has developed their H20 AI chips specifically tailored for the Chinese market.

While NVIDIA’s mainstream AI GPUs may outperform water in raw capabilities, the chip in question is often the go-to choice for AI inference tasks when no other alternatives are at hand.

Leading Chinese corporations like Alibaba and Tencent utilize the H20 chip for powering their own AI systems as well as DeepSeek’s economical AI model. It is said that DeepSeek’s R1 model required 50,000 NVIDIA Hopper GPUs to be trained, with hardware costs amounting to approximately $1.6 billion by themselves.

In response to the U.S. White House’s April 2024 prohibition on selling H20 GPUs to China, Huawei accelerated the manufacturing of its innovative AI chip, the 910C, to cater to the surge in demand for alternatives to NVIDIA products.

Furthermore, it has been noted (through Tom’s Hardware) that used NVIDIA GPUs like the A100 and H100 are actively being traded in a bustling Chinese market for repairs.

In other words, NVIDIA is keen to maintain its dominant position, as it currently holds approximately 90% of the AI chip market, a significant factor that contributed to it achieving the status of a $4 trillion company.

What caused the Chinese H20 ban reversal?

It appears that the decision to allow H2O again is partially because of talks with China concerning rare earth magnets. American industries require these magnets, whereas China requires H2O graphics processing units (GPUs).

However, NVIDIA’s stance on exporting AI chips to foreign countries likely contributed significantly to the resumption of H20 chip sales in China. In a recent blog post, NVIDIA’s CEO, Jensen Huang, stated that this decision was made to prevent other AI companies from gaining too much power.

We think it’s optimal for all civil models to perform optimally using American tech infrastructure, thereby inspiring countries globally to align with our technological choices.

Huang further pointed out that allowing foreign AI chips to establish themselves as global norms could prove disastrous, potentially giving companies such as Huawei an opportunity to assert dominance.

A group of 20 national security specialists have expressed opposition to the decision to reinstate the supply of H20 chips to China. In a written correspondence, they argue that this move could strengthen China’s position in the artificial intelligence competition.

We are expressing our serious worry about the latest decision to restart exports of Nvidia’s H20 chips to China. As individuals with experience in national security policy, we consider this action as a significant mistake that could jeopardize the U.S.’s economic and military advantage in artificial intelligence – an area widely recognized as critical for 21st-century global leadership.

Absolutely, it’s important to note that NVIDIA too stands to lose significantly due to the April 2025 ban. This decision led to a write-off worth $5.5 billion and billions more in foregone revenues. For a company like NVIDIA, which primarily aims to generate profits, not being able to tap into the vast Chinese market is undeniably a major source of annoyance.

Regarding the overturning of the ban, it appears that the Trump administration agrees with Huang’s strategy: permit NVIDIA to sell AI chips with reduced capabilities to China, prevent Huawei and other rivals from expanding their market share, and maintain a thriving stock market by continuing NVIDIA’s impressive growth trajectory.

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2025-07-30 21:09