Nvidia may increase production of H200 AI chips amid strong demand in China - Reuters

Chipmaker Nvidia has informed Chinese customers that it is exploring the possibility of expanding its production capacity for H200 AI chips due to the volume of orders exceeding the company's current capacity. This was reported by Reuters sources. Earlier, US President Donald Trump said that Washington would allow the export of these chips to China, but a new obstacle may now become Beijing's position.

A Reuters source said demand from Chinese companies for powerful AI chips is so high that Nvidia is seriously considering expanding production. Nvidia did not respond to Reuters' request for comment.

The H200 chips belong to the previous generation of Nvidia's processors, which began mass adoption in 2024, and are produced at Taiwanese TSMC's factories, but in extremely limited batches as the chipmaker focuses on releasing more advanced lines - Blackwell and the upcoming Rubin. Reuters sources claim that the availability of the H200 chips has been a major concern for Chinese customers, and they have reached out to Nvidia for clarification. As part of the briefings, Nvidia provided customers with information on current shipments, one of the agency's sources said, without specifying figures.

Reuters sources said this week that major Chinese companies, including Alibaba and ByteDance, have already approached Nvidia about purchasing the H200 and expressed interest in placing large orders. On Tuesday, US President Donald Trump said the US government would allow Nvidia to export H200 processors - the company's second most powerful AI chips - to China, but would charge a 25% levy on such shipments. At the same time, semiconductor companies will be allowed to ship technology that was released 18 months ago or more to China.

However, uncertainty over Beijing's supply remains as Chinese authorities have not yet given the green light to purchase H200. According to Reuters, China held emergency meetings on the issue on Wednesday and a decision on authorizing H200 imports will be made later.

Chinese companies' high interest in the H200 is due to the fact that it is the most powerful chip they currently have access to. It's about six times more powerful than the H20, a stripped-down export version of Nvidia's chip specifically designed for the Chinese market and set for release in late 2023, Reuters explains.

"The H200's performance in compute tasks is about two to three times better than the most advanced domestic gas pedals," White Oak Capital Partners investment director Nori Chiu told Reuters. - "I'm already seeing many cloud providers and enterprise customers placing aggressive large orders and lobbying for relaxations from the government in exchange for meeting a number of conditions.

During the emergency meetings, according to Reuters' sources, a proposal to require companies to purchase a certain proportion of domestic chips with every H200 purchase was discussed.

This article was AI-translated and verified by a human editor