NVIDIA Will Not Resume Production of H20 AI Chips in China, According to Reports

This article is intended for informational purposes only and should not be considered investment advice. The author currently holds no positions in any of the stocks discussed.

NVIDIA Encounters Hurdles in Fulfilling Chinese H20 GPU Orders

NVIDIA Corporation, a leader in AI chip technology, is currently grappling with challenges in fulfilling orders for its H20 GPU, specifically designed for the Chinese market. Despite the recent easing of restrictions by the Trump administration, which included issuing export control licenses, NVIDIA’s production resources are primarily allocated towards its more advanced chip offerings. Consequently, this has led to significant production constraints on the H20 GPU, which, while operational, lags behind NVIDIA’s latest high-performance chips.

Licensing Developments and Production Constraints

During a visit to China, NVIDIA’s CEO Jensen Huang expressed optimism regarding the issuance of export licenses for the H20 GPUs. However, reports have since emerged suggesting that the company might face substantial hurdles in meeting the surging demand from Chinese clients. Huang acknowledged these challenges during a press interaction, noting the complexities of reconciling customer demand with existing inventory levels.“It’s probably not 100%, but it’s not 0% either, ” he remarked, alluding to the uncertainties surrounding the availability of H20 GPUs.

New Insights on Production Issues

According to a recent report from The Information, NVIDIA is unlikely to resume production of the H20 GPUs. The contract manufacturer, TSMC, has redirected its production lines from the H20 towards other chip models, severely limiting NVIDIA’s ability to replenish its inventory of China-specific GPUs. Currently, NVIDIA holds a mix of completed H20 units and unprocessed wafers, but the status of these wafers remains ambiguous, with details on their production stage unspecified.

NVIDIA H100 AI Chip — The NVIDIA H100 AI chip displayed prominently. Image: Patrick Kennedy/STH

Future Developments and Company Strategy

Prior to the shift in U. S.policy, NVIDIA had been innovating upgrades to the H20 specifically for its Chinese clientele. Notably, the H20 is a scaled-back version of NVIDIA’s advanced Hopper architecture chips. Meanwhile, the latest offerings from NVIDIA, identified as the Blackwell series, are already reaching markets not affected by U. S.sanctions on AI chips.

Additionally, market speculation suggests that NVIDIA may be developing a Blackwell variant tailored for Chinese customers. CEO Huang has hinted at the possibility of marketing advanced GPU technologies to China, although this depends heavily on forthcoming regulatory approvals from U. S.authorities.

Upcoming Earnings Report: What Investors Should Know

As NVIDIA prepares for its upcoming earnings report, the company has entered a “quiet period, ” restricting its ability to address market rumors. Investors are poised to closely analyze the financial outcomes, particularly looking for indicators of how resuming GPU sales in China might impact the company’s revenue streams and cost management efforts.

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