Nvidia resumes H20 chip orders amid US-China trade tensions

Nvidia has recently placed an order for 300,000 H20 chipsets with Taiwan Semiconductor Manufacturing Company (TSMC), a step towards the Chinese market amid shifting geopolitical dynamics.

The order comes after the Trump administration recently eased restrictions on Nvidia’s H20 sales to China, reversing a prior ban that was imposed over national security concerns. By expanding its inventory from the existing stockpile of 600,000 to 700,000 H20 chips, Nvidia aims to meet strong demand from Chinese tech giants and reinforce its presence in this crucial market.

The H20 chipset was developed specifically for China, reflecting compliance with US export guidelines that prevent the transfer of more advanced AI chips. Unlike Nvidia’s H100 and Blackwell series, the H20’s reduced computing power enables continued business while adhering to restrictions.

The orders are integral to broader US-China negotiations, particularly regarding rare earth magnets, essential components where trade tensions have been pronounced.

Despite Nvidia’s determined efforts to secure necessary export licences from the US Department of Commerce, approvals remain pending, and the bureaucratic slackening only complicates plans for full-scale production resumption, which could take up to nine months and hinges on adequate client orders.

Economically, the decision to resume orders underscores China’s importance to Nvidia, especially following significant orders from tech giants like Tencent, ByteDance, and Alibaba before the April sales ban. Prior to this, Nvidia had anticipated potential write-offs and forgone sales amounting to billions, underlining the market’s potential impact on their financial outlook.

The resumption of chip sales, however, has drawn bipartisan criticism in the US, with concerns about national security and maintaining an edge in AI technology. Despite this, Nvidia argues for the importance of engagement with the Chinese market to prevent developers from shifting to competitors, especially when using Nvidia’s proprietary software tools.

Source: Reuters

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