Nvidia is evaluating plans to significantly increase production of its H200 AI chips after Chinese buyers flooded the company with orders that have exceeded current manufacturing capacity. According to Reuters, Nvidia informed clients in China that it is studying ways to add capacity because orders have surpassed existing limits.
The surge in demand began after U.S. President Donald Trump announced that the government would allow Nvidia to export H200 chips to China, provided the company pays a 25% fee on those sales. This policy change made the H200 the most sought-after chip among major Chinese technology firms.
Chinese companies including Alibaba and ByteDance have contacted Nvidia this week requesting large batches and seeking details on delivery timelines. Nvidia stated it is working to "manage our supply chain to ensure that licensed sales of the H200 to authorized customers in China will have no impact on our ability to supply customers in the United States."
However, Chinese regulatory approval remains uncertain. Three sources familiar with the situation revealed that Beijing officials held emergency meetings on Wednesday to decide whether to allow the H200 into the country at all. Chinese buyers are facing supply constraints, with only small amounts of H200 chips currently being manufactured as Nvidia focuses resources on its upcoming Blackwell and Rubin chip lines.
The H200, which entered mass use last year, is the fastest chip in Nvidia's Hopper family and is manufactured by TSMC using its 4nm process. Chinese firms view the H200 as the most powerful chip they can legally purchase, delivering approximately six times the performance of the H20 chip that Nvidia designed specifically for the Chinese market in late 2023 with limitations to comply with U.S. regulations.
Nori Chiou, investment director at White Oak Capital Partners, noted that the H200's compute power is "approximately 2-3 times that of the most advanced domestically produced accelerators." He added that cloud providers and enterprise users are placing substantial orders while lobbying the Chinese government to relax restrictions.
Chinese officials have discussed potentially tying H200 imports to purchases of domestic chips, with proposals requiring buyers to purchase a set amount of local chips for every H200 they import. Meanwhile, China continues developing its own chip ecosystem through companies like SMIC, though domestic chips remain significantly behind TSMC's 5nm technology.
