China faces Nvidia chip shortages

Demand for Nvidia’s H20 chips is surging as Chinese tech giants, including Tencent and Alibaba, rush to adopt AI models, straining already limited supplies.
Chinese server maker H3C warns of Nvidia H20 chip shortages, citing geopolitical tensions and trade restrictions as key factors affecting supply chains and future availability.

Chinese server manufacturer H3C has warned of potential shortages of Nvidia’s H20 chip, the most advanced AI processor still legally available in the country under US export controls.

In a notice to clients, the company revealed that its stock of H20 chips was nearly depleted, citing geopolitical tensions as a major factor affecting global supply chains.

New shipments are expected by mid-April, but future availability remains uncertain due to ongoing trade restrictions and supply disruptions.

The demand for H20 chips has surged, particularly as companies race to integrate AI models developed by Chinese startup DeepSeek.

Major tech firms such as Tencent, Alibaba, and ByteDance have significantly increased their orders, leading to further strain on supply.

H3C stated that future chip distribution will prioritise long-term, high-margin customers under a profit-first approach, raising concerns among smaller buyers about access to the critical technology.

The H20 was introduced after the US tightened export controls on high-performance AI chips in October 2023, blocking Nvidia’s most advanced processors from the Chinese market.

Washington has restricted such exports since 2022, citing national security concerns over China’s potential military applications of AI technology.

Despite these measures, Nvidia has reportedly shipped around one million H20 units in 2024, generating more than $12 billion in revenue. Meanwhile, domestic alternatives from Huawei and Cambricon are emerging as potential substitutes amid the ongoing supply crunch.

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