Chinese Tech Giants Order $16 Billion Worth of Nvidia H20 Chips Amid AI Surge
Leading Chinese technology companies, including ByteDance, Alibaba Group, and Tencent Holdings have reportedly placed orders totaling at least $16 billion for Nvidia’s H20 server chips during the first quarter of 2025, according to The Information. This surge highlights the growing demand for AI infrastructure in China, particularly in the wake of local startup DeepSeek's rapid rise with its affordable AI models.
Nvidia's H20 Chip Sees Soaring Popularity
The H20 is currently Nvidia’s most advanced AI chip that can be legally sold in China under US export restrictions as reported by Reuters. Introduced after the latest round of US regulations took effect in October 2023, the H20 has quickly become essential for Chinese tech firms seeking to scale up AI capabilities.
Supply Warnings and Strategic Concerns
In March, Reuters reported that Chinese server manufacturer H3C raised concerns about possible shortages of the H20, noting that inventories were nearly depleted and that future supply faced uncertainty due to geopolitical tensions and supply chain disruptions. H3C, along with Inspur, Lenovo, and xFusion (a Huawei spin-off), is one of Nvidia's key original equipment manufacturer (OEM) partners in China.
Since 2022, the US government has been limiting exports of Nvidia's top-of-the-line AI chips to China on fears that the technology might be utilized to enhance China's military might. US President Donald Trump has recently suggested applying 25% tariffs to semiconductors and associated goods imported from overseas, further clouding the international chip trade.
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Nvidia Balancing Global Strategy
Even with export controls, China remains a significant market for Nvidia. In fiscal year 2025, the firm generated $17.11 billion in revenue from the Greater China region, including Hong Kong. Nvidia CEO Jensen Huang has played down the near-term effects of US restrictions but confirmed plans to ultimately move production to the United States to secure long-term supply stability.
