More than $16 billion in orders for Nvidia's (NVDA, Financials) H20 server chips have been placed by Chinese firms during the first quarter of 2025, according to a report by The Information citing individuals familiar with the matter.
The buyers include some of China's most prominent technology companies: ByteDance, Alibaba Group (BABA, Financials), and Tencent Holdings. These chips represent the most advanced artificial intelligence processors that Nvidia is legally permitted to sell in China under current U.S. export controls, which were tightened in October 2023.
The surge in orders is reportedly linked to demand from DeepSeek, a Chinese artificial intelligence startup building cost-efficient models for the local market. Nvidia, as well as the involved Chinese firms, did not respond to requests for comment, Reuters reported.
H3C, one of China's largest server manufacturers and a key Nvidia OEM partner, raised concerns in March about possible shortages of the H20 chip. Other original equipment manufacturers working with Nvidia in China include Inspur, Lenovo, and xFusion, the x86 server arm spun off from Huawei.
The H20 chip was introduced following U.S. export restrictions implemented in 2023. These controls followed broader limitations initiated in 2022 that aimed to curb China's access to advanced semiconductor technologies, with U.S. officials citing concerns about potential military applications.
In February, former U.S. President Donald Trump said he would introduce tariffs of about 25% on semiconductor imports if re-elected. Nvidia Chief Executive Jensen Huang said at the time that while the company expected little short-term impact, it may eventually consider moving production to the United States.
Despite ongoing trade tensions and restrictions, China remains a key market for Nvidia. The company reported revenue of $17.11 billion from the region, including Hong Kong, in its fiscal 2025 results.
