NVIDIA to boost AI chip production amid China demand surge
What's the story
NVIDIA is considering increasing the production capacity of its powerful H200 AI chips, according to Reuters. The decision comes after a surge in orders from Chinese clients, which have exceeded the company's current output levels. This development comes after US President Donald Trump announced that his administration would allow NVIDIA to export H200 processors to China and collect a 25% fee on such sales.
Market response
Chinese companies show strong interest in H200 chips
Chinese tech giants like Alibaba and ByteDance have already expressed their interest in purchasing the H200 chips from NVIDIA. The companies are eager to place large orders, highlighting the strong demand for these advanced AI processors. However, it's worth noting that the Chinese government has not yet approved any purchase of the H200, leaving some uncertainties about future transactions.
Production challenges
H200 chips' supply and production focus
Currently, only limited quantities of H200 chips are being produced as NVIDIA focuses on its next-generation Blackwell and Rubin lines. The company has been providing Chinese clients with guidance on current supply levels, amid concerns over the availability of these advanced AI processors. The H200, which went into mass deployment last year, is manufactured by Taiwan Semiconductor Manufacturing Company (TSMC) using its 4nm process technology.
Tech comparison
H200's performance and China's domestic chip industry
The H200 is six times more powerful than the downgraded H20 chip, which was launched for the Chinese market in late 2023. China's push to promote its own domestic AI chip industry has raised concerns over the potential impact of allowing H200 into the country. Nori Chiou, investment director at White Oak Capital Partners, said "its (H200) compute performance is approximately 2-3 times that of the most advanced domestically produced accelerators."
Information
Proposed conditions for H200 purchases
During emergency meetings, a proposal was made to make each H200 purchase conditional on bundling a certain ratio of domestic chips. This comes as NVIDIA is not only transitioning to Rubin but also competing with companies like Google for the advanced chipmaking capacity from TSMC.