Jefferies Reports NVIDIA Inventory at 600,000 to 900,000 H20 GPUs Amidst Chinese Demand of 1.8 Million Units

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US Export Control Policies and NVIDIA’s Strategic Moves

Recent developments indicate a thawing in the previously stringent US export controls on NVIDIA’s H20 GPUs intended for the Chinese market. This shift appears to be part of a larger negotiation to address reciprocal Chinese export restrictions on rare earth magnets. However, this easing of regulations may still fall short of meeting China’s immense demand for AI GPUs.

Historical Context: Previous Export Licensing Challenges

To provide some context, back in April 2025, the Trump administration had implemented strict export licensing requirements on NVIDIA’s H20 chips targeted at China. This decision forced NVIDIA into a significant financial setback, as the company had to write off billions of dollars’ worth of inventory.

NVIDIA’s Push for Resuming Sales in China

Following extensive lobbying efforts by CEO Jensen Huang, who advocated for re-engaging with the Chinese market, NVIDIA disclosed plans to apply for a government permit to resume sales of its China-specific H20 GPUs. A recent blog post by the company emphasized its optimism, noting assurances from US officials regarding the swift approval of necessary authorizations for H20 shipments to China.

Market Dynamics: Demand vs. Supply Surplus

According to an analysis by Jefferies, NVIDIA currently holds an inventory of approximately 600, 000 to 900, 000 H20 GPUs. In contrast, the demand from China is estimated to be around 1.8 million units, highlighting a significant shortfall.

Jefferies further noted that NVIDIA successfully shipped about 300, 000 H20 GPUs to China in the first quarter of 2025, mirroring its prior shipping patterns prior to the imposition of the export bans. Despite various market obstacles, analysts believe that Chinese companies continue to favor NVIDIA’s products. This preference stems from the performance of the CUDA ecosystem and the lack of competitive domestic alternatives, such as Huawei’s 910C GPUs.

Future Developments: Upcoming NVIDIA B30 Chips

The existing gap between GPU supply and demand in China is anticipated to be partially addressed with NVIDIA’s forthcoming B30 chips. Set to be shipped in the fourth quarter of 2025, these chips are expected to have reduced memory specifications to comply with potential new criteria for AI chip export controls.

Investment Projections and Challenges in the US Chip Sector

In light of these developments, Jefferies has increased its projections for AI-related capital expenditures in China for this year by 40%, now estimating it at an impressive $108 billion. Furthermore, it raised the forecast for the years 2025-2030 by 28%, bringing the total estimate to $806 billion.

Meanwhile, the US is grappling with its own supply deficits in domestically produced chips. Recently, US Treasury Secretary Scott Bessent pointed out that the TSMC facility in Arizona caters to only 7% of the chip demands from American companies. He indicated that excessive regulation hampers efforts to enhance domestic chip manufacturing.

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