Nvidia Ramps Up H20 Chip Production Amidst Surging Chinese Demand
Beijing, Tuesday, 29 July 2025.
Nvidia is increasing H20 chip production. The company placed an order for 300,000 units with TSMC. Strong demand from China is the reason. This reverses an earlier plan to rely on existing inventory. The Trump administration had allowed Nvidia to resume H20 sales to China. This followed a ban in April over national security concerns. Nvidia developed the H20 chip for the Chinese market. This was to comply with US export restrictions. Nvidia may have lost $15 billion in sales due to this issue.
H20 chip specifications and market dynamics
The H20 chip is designed specifically for the Chinese market [1]. It has reduced computing power compared to Nvidia’s H100 and Blackwell series [2]. This is to comply with U.S. export restrictions imposed in late 2023 [1]. Despite the lower specifications, the H20 remains attractive in China [2]. Chinese tech giants like Tencent, ByteDance, and Alibaba previously increased H20 orders [1]. These companies use the chips for cost-effective AI model deployment [2]. The chip’s compatibility with Nvidia’s software ecosystem is a key advantage [2].
production timeline and supply chain considerations
Nvidia CEO Jensen Huang stated that restarting H20 production depends on order volumes [2]. He noted a nine-month lead time to resume full supply chain operations [2][4]. The new order supplements existing H20 inventory [4]. This inventory is estimated to be between 600,000 and 700,000 chips [1][4]. Nvidia sold approximately 1 million H20 chips in 2024 [1][4]. The company had previously canceled orders and TSMC production plans for the H20 after the April ban [5].
regulatory hurdles and export licenses
Nvidia needs export licenses from the U.S. government to ship H20 chips [1]. While Nvidia expressed optimism about receiving these licenses in mid-July 2025, the U.S. Commerce Department has yet to approve them [1][2]. Nvidia is now requesting Chinese companies to submit detailed order forecasts [1][2]. The Trump administration’s decision to allow H20 sales was reportedly part of negotiations with China [2]. These negotiations concern rare earth magnets [2]. This decision has faced criticism from U.S. lawmakers [2].
financial impact and market position
The resumption of H20 chip production signals Nvidia’s commitment to the Chinese market [5]. The initial ban on H20 sales led Nvidia to warn of a potential $5.5 billion write-off [1][4]. Nvidia also estimated a loss of $15 billion in potential sales [1][4]. Re-engaging the Chinese market is strategically important [2]. It allows Nvidia to maintain its developer ecosystem and compete against domestic rivals like Huawei [2]. Strong demand for H20 chips could positively impact Nvidia’s revenue and market position [1].