Nvidia is considering increasing production capacity for its cutting-edge H200 AI chips as its demand grows, surpassing its current output level.
According to Reuters, the move came on the heels of US President Donald Trump’s nod, allowing Nvidia to export H200 to China after imposing a 25 percent fee on such sales.
As per sources privy to the matter, demand for Nvidia’s second-fastest AI chips has grown specifically in China that the chipmaker company is looking to expand chip production capacity. Currently, the US-based firm is focusing on producing its most advanced Blackwell GPUs and upcoming Rubin lines.
"We are managing our supply chain to ensure that licensed sales of the H200 to authorized customers in China will have no impact on our ability to supply customers in the United States," an Nvidia spokesperson said in a statement.
After Trump’s approval, major Chinese tech companies, including ByteDance and Alibaba have reached out to Nvidia with a desire to order advanced H200 chips.
Before the lifting of ban, only H20 chips were legally allowed to be exported to China as the most advanced AI semiconductor. Compared to H20, H200 is six times more powerful chip.
However, uncertainties prevail in China as the government has yet to give greenlight on H200 purchase. Recently, the Chinese government held a meeting of tech giants, including Alibaba, ByteDance, and Tencent Holdings and asked them to analyze their demands for H200 chips.
H200 chips are matchlessly valuable in training AI models. The lifting of the ban will be a double-edged sword for Chinese authorities.
On one hand, they may need to review purchase requests and on the other hand, they also want to encourage the sales of domestic AI chips manufactured in China.
The domestic companies have yet to produce the chip comparable to cutting-edge H200. But the export of H200 to China could hinder the domestic industry growth.
According to Nori Chiou, investment director at White Oak Capital Partners, "Its (H200) compute performance is approximately 2-3 times that of the most advanced domestically produced accelerators.”
“I am already observing many CSPs (Cloud Service Providers) and enterprise customers aggressively placing large orders and lobbying the government to relax restrictions on a conditional basis," he added.
