Nvidia (NVDA) has told Chinese customers that it is evaluating adding production capacity for its high-performance H200 artificial intelligence chip as order volume has exceeded current production capacity, according to two sources familiar with the matter. Previously, U.S. President Donald Trump stated on Tuesday that the U.S. government would allow Nvidia to export its second-fastest artificial intelligence chip H200 processor to China and charge a 25% fee on related sales. Nvidia's production expansion plan was proposed in this context.
One of the sources said that Chinese companies have extremely strong demand for the chip, which has prompted Nvidia to favor adding new production capacity. The person spoke on condition of anonymity because the discussions are confidential.
Nvidia did not immediately respond to Reuters' request for comment.
Reuters reported on Wednesday that leading Chinese companies, including Alibaba and ByteDance, had contacted Nvidia this week to inquire about purchasing H200 chips and were interested in placing large orders.
Reuters also pointed out on Wednesday that the current production of H200 chips is extremely limited because the leading American artificial intelligence chip company is fully committed to producing its most advanced "Blackwell" series of chips and the upcoming "Rubin" series of chips.
The supply of H200 chips has been a core concern for Chinese customers, who have consulted Nvidia to clarify relevant supply information, sources said.
One of the two sources said that Nvidia has also informed the current supply level in its briefing to customers, but did not disclose specific figures.
The H200 chip began to be deployed on a large scale last year. It is the most powerful artificial intelligence chip in Nvidia's previous "Hopper" series. The chip is manufactured by TSMC using its 4nm process technology.
The Trump administration's approval of H200 chip exports comes at a time when China is vigorously promoting the development of its local artificial intelligence chip industry. Since domestic chip companies have not yet produced products comparable to H200, there are concerns that allowing H200 to enter China may hinder the development of local related industries.
Nori Chiou, investment director at White Oak Capital Partners, said: "The computing performance of the H200 is approximately 2 to 3 times that of the most advanced accelerators in the country."
He also said: "I have noticed that many cloud service providers and enterprise customers are actively placing large orders and lobbying the government to relax relevant restrictions conditionally. After all, China's artificial intelligence demand has exceeded local production capacity."
The aforementioned two sources and a third source revealed that during this emergency meeting, there was a proposal that for every batch of H200 chips purchased, domestic chips should be bundled and purchased according to a certain proportion.
For Nvidia, adding new production capacity also faces considerable challenges, because the company is not only in the technological transition stage to the "Rubin" series of chips, but also needs to compete with companies such as Google parent company Alphabet for TSMC's limited advanced chip manufacturing capacity.
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