china's ai thirst strains nvidia's h20 supply
Beijing, Monday, 17 March 2025.
nvidia’s h20 ai accelerators are facing a critical shortage in china. demand is surging, fueled by tencent, bytedance and others who are developing large language models. tencent alone invested billions of yuan in h20 chips. despite export restrictions, nvidia’s h20 chip is popular because of its software ecosystem. this shortage could impact nvidia’s revenue and market position, even as the company rakes in billions from china.
h20’s market dynamics
The nvidia h20 is tailored for the chinese market [1]. Major chinese tech firms like tencent and bytedance are purchasing h20 gpus in bulk to meet their increasing computing demands [1]. Tencent is integrating ai functions into services like tencentdocs and tencent maps, driving substantial h20 purchases [1]. Other companies developing large language models are similarly increasing their gpu demand [1]. Despite u.s. sanctions, nvidia remains a key player in china, with tencent and bytedance acquiring 230,000 accelerators in 2024 alone [1]. China is nvidia’s second largest market after microsoft [1].
financial impact and market share
The h20 chip, despite being a modified version for compliance, sells for approximately 100,000 yuan each [2]. Nvidia’s sales of this chip in china have generated billions of u.s. dollars annually [2]. China’s robust demand for ai chips significantly boosts nvidia’s overall performance [2]. In 2024, nvidia’s revenue reached $130.5 billion, with a net profit of $72.8 billion [2]. Nvidia’s revenue from china in the third quarter of 2024 alone was $5.42 billion [2]. Nvidia’s total revenue from china in 2024 reached $17.1 billion, a 66.019 66% increase year-over-year [2] [alert! ‘Value of 10.3 billion is not in provided sources, this is an estimate based on the 66% increase’]. Omdia estimates that two of nvidia’s top five global clients in 2024 were chinese companies [2].
export controls and competition
U.S. export controls have impacted nvidia’s data center revenue share in china, decreasing from 19% in fiscal year 2023 to a mid-single-digit percentage in fiscal year 2024 [4]. Nvidia’s cfo, colette kress, noted increased competition in the chinese market [4]. Nvidia continues to comply with u.s. trade regulations [4]. Singapore authorities recently arrested nine individuals for illegally reselling nvidia gpus to china, involving a case value of 2.8 billion [5] [alert! ‘Currency unspecified’]. Huawei is also developing competitive ai chips, potentially offering chinese firms alternative options [2][6].
nvidia’s response and future outlook
Nvidia has not directly addressed rumors about order issues for the h20 chip [4]. Some reports suggest certain manufacturers cannot order the chip, while others claim substantial shipments are still arriving, exceeding expectations [4]. Nvidia ceo, huang renxun, has stated the company will continue providing compliant chips to the chinese market [4]. These include the hgx h20, l20 pcie, and l2 pcie, based on nvidia’s hopper and ada lovelace architectures [4]. Nvidia is partnering with tencent to optimize dlss for upcoming games, signaling a continued commitment to the chinese market [5].