Nvidia has significantly increased its chip orders from Taiwan Semiconductor Manufacturing Company (TSMC) due to a surge in China demand for H20 chips. Reuters reported on Tuesday that Nvidia placed a 300,000-unit order for its H20 GPUs with TSMC. This order marks a restart in chip supply, driven by renewed interest from Chinese tech firms.
This move follows the Trump administration’s recent decision to ease restrictions on Nvidia’s sales of H20 GPUs to China. The earlier ban was imposed over national security concerns. Now, with the lifted restrictions, Nvidia has moved beyond its stockpile and resumed procurement to meet the growing China demand for H20 chips.
The H20 chip was developed specifically to comply with U.S. export controls introduced in late 2023. Nvidia designed this GPU to serve the Chinese market, knowing it had to be less powerful than its H100 or Blackwell chips. Still, it remains vital for Nvidia to maintain a foothold in China’s expanding AI market. Sources indicate Nvidia had previously stockpiled between 600,000 and 700,000 H20 chips.
Meanwhile, research firm SemiAnalysis estimates Nvidia sold roughly one million units of these chips this year. Nvidia’s CEO, Jensen Huang, said during a visit to Beijing earlier this month that any significant production increase would depend on order volumes. He added that scaling up manufacturing would take about nine months.
Despite these optimistic plans, Nvidia still awaits export license approvals, according to insiders. The company has requested Chinese customers to provide updated purchase documents and demand forecasts to support the licensing process. This renewed focus on China demand for H20 chips ties into wider U.S.-China negotiations involving rare earth magnet exports. However, some U.S. lawmakers have criticized the easing of restrictions. They argue that even downgraded U.S. AI chips could pose national security risks.
On the other hand, Nvidia and other American tech companies believe maintaining business ties in China is essential. They emphasize that such engagement helps preserve software compatibility and counters the rise of Chinese competitors like Huawei. Prior to the sales suspension in April, major Chinese firms like Tencent and Alibaba had already increased H20 orders to power AI models such as DeepSeek and internal systems.
Even after the ban, China demand for H20 chips remained robust in the country’s gray market. Reports suggest that smuggling and repair services for Nvidia’s advanced GPUs grew in response to the restrictions. Nvidia warned that the export halt might force it to write off NT$163 million (about US$5.5 billion) in inventory and miss out on potential revenue estimated at NT$445 billion.
Neither Nvidia nor TSMC commented on the recent order, and the U.S. Commerce Department did not respond to requests for information. In summary, Nvidia’s increased orders to TSMC reflect the strong China demand for H20 chips. The evolving trade environment and regulatory changes continue to shape the company’s strategy in this critical market.
