Nvidia Orders 300,000 H20 Chips from TSMC Amid Surging China Demand
Did you know Nvidia just placed an order for 300,000 H20 chips from TSMC? That’s a big deal, and here’s why. These chips are specially designed to work around U.S. export rules while still meeting China’s growing demand for artificial intelligence (AI) technology.
In recent years, AI has become the heart of everything from smart cities and self-driving cars to advanced chatbots. And China doesn’t want to fall behind. So, when the U.S. placed limits on chip exports, Nvidia came up with a clever solution: the H20 chip.
As we look closer at this move, we’ll understand how Nvidia is staying ahead in the AI race, how China’s tech industry is responding, and why TSMC plays a key role in making it all possible. Let’s discuss.
What are H20 Chips?
The H20 is a version of Nvidia’s Hopper‑architecture chips. It’s weaker than the H100 and Blackwell models. AI experts say Nvidia lowered its speed and limit. That made it legal to sell under strict U.S. export rules. Nvidia made it just for China because of earlier bans on top chips like the H100 since 2022.
These chips are made by TSMC. They include 96 GB of HBM3 memory and about 4 TB/sec bandwidth. That makes them good for AI inference tasks even though they are restricted.
Nvidia’s Strategy Behind the Massive Order
We see Nvidia placing a big order of 300,000 more H20 chips from TSMC. They already had 600,000-700,000 units in inventory. Now they want more to handle China’s high demand.
At first, Nvidia had halted production and canceled customer orders when the export ban hit in April 2025. TSMC had switched those production lines to other chip types. Rebooting H20 production now may take nine months, according to the CEO’s comments in Beijing.
Still, Nvidia is optimistic. The firm may resume full production later if demand stays strong. For now, this order shores up its power in China’s AI space.
China’s AI Market: Why Demand Is Booming
China used about one million H20 chips in 2024 alone. That shows how hungry the market is for AI hardware. Big firms like Tencent, Alibaba, and ByteDance ordered most of those chips.
Even with bans on the more powerful GPUs, Chinese labs still run advanced AI training. That means they often turn to the H20 or even banned models like the H100 or B200, sometimes via smuggling.
Repair businesses in Shenzhen already fix hundreds of B200 or H100 chips each month. That signals strong demand even for restricted tech.
Role of TSMC in Global Chip Supply
TSMC handles advanced nodes like 5 nm and 7 nm that Nvidia’s H20 chip uses. That makes them Nvidia’s key manufacturing partner. Taiwan’s position in global semiconductors is central to the supply for AI hardware.
TSMC even shifted production lines away from H20 chips during the ban. Moving back will take time and resources, which underlines how critical TSMC is to supply chain recovery.
U.S. Export Restrictions and Regulatory Compliance
The U.S. first banned the export of advanced GPUs to China in 2022. More restrictions followed in October 2023. They targeted chips under 14 nm or used for supercomputing or AI training.
Nvidia made the H20 to meet the new limits. But in April 2025, the Trump administration briefly banned even the H20. A few months later, trade deals around rare-earth magnets led the U.S. to reverse that policy and allow H20 exports again.
Despite that, Nvidia still needs licenses from the U.S. Commerce Department. The company expects approvals soon, though officials have not yet confirmed it.
Implications for Competitors and the AI Race
This move puts pressure on AMD, Intel, and Chinese chip firms. If Nvidia can serve China again, local firms like Huawei may struggle to catch up.
At the same time, critics in the U.S. worry. Twenty former national security officials argued that shipping H20 chips to China weakens American advantage and risks boosting Beijing’s AI and military power.
Potential Risks and Challenges
China’s demand is high, but Nvidia still faces export delays. Even with policy changes, licensing can slow shipments. Restarting production could take months.
Political risk is real. The export reversal met bipartisan opposition in the U.S. lawmaking community. Some call it a strategic mistake that may harm national security.
Smuggling of banned chips is rampant despite restrictions. That could prompt tougher crackdowns or new controls in other countries to limit diversion.
Future Outlook and Conclusion
We see Nvidia making a smart bet. They aim to tap into China’s AI boom. Augmenting their stock of H20 chips by 300,000 units shows confidence in future orders.
China’s AI growth continues. Even restricted chips are in demand. Nvidia may need new designs like the B30, based on Blackwell architecture, to stay compliant yet competitive.
As trade talks proceed, Nvidia sits at a crossroads. It must balance regulatory hurdles, China’s appetite, and domestic political concerns. Still, this bold order signals that Nvidia plans to keep serving Chinese customers even in a shifting global tech world.
Frequently Asked Questions (FAQs)
Nvidia gets its chips made by TSMC, a company in Taiwan. TSMC is one of the world’s biggest chip makers and works with many tech firms.
Nvidia designs the chips, but TSMC makes them in Taiwan. These chips are then sent to places where they are used in computers, servers, and AI systems.
Big tech companies like Amazon, Google, Microsoft, and Meta buy lots of Nvidia chips. They use them in data centers to power AI, cloud, and gaming services.
Tencent, Alibaba, Baidu, and ByteDance are reported to order H20 chips from Nvidia. They use them to train AI models and run smart apps across China.
Disclaimer:
This is for information only, not financial advice. Always do your research.