Nvidia is reviewing plans to increase production of its H200 graphics chips in response to the surge in demand from China.
This spike is a response to a recent policy change in the United States. After lobbying the Trump administration, Nvidia received approval to sell H200 chips in China.
The approval reversed earlier restrictions that had blocked sales of the chip. Chinese companies are turning to the U.S. for AI development.
The H200
The H200 is one of Nvidia’s most powerful Hopper-generation graphics processing units designed to train large language models.
These models support tools such as chatbots, image generators, and data analysis systems.
Compared with earlier options, the H200 offers a major performance jump as it is far more powerful than the H20 chip.
Nvidia had customized the H20 specifically for the Chinese market to comply with export rules.
Because of past restrictions, many Chinese firms relied on smaller or less advanced chips. The Chinese market even turned to locally produced technology.
But now, the availability of H200 provides options that include both locally produced and internationally sourced tech.
Conditions
The U.S. Department of Commerce approval came with strict terms. Nvidia has been tasked with paying a 25% reduction in sales from those chips.
Despite the caveat, Nvidia recorded a win that expands its customer base to include international patronage.
This is a major step up from the Biden administration rules, which limited sales of advanced AI chips to China.
Production Capacity
According to Reuters, Nvidia is now considering whether to add production capacity. At present, H200 chips are produced in limited quantities.
This constraint adds pressure to Nvidia’s supply chain planning. But despite rising demand, Nvidia has stated that U.S. customers will not be affected.
“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,” a company spokesperson said in an emailed statement.
Large Orders
Several major Chinese companies have already reached out to Nvidia. These include Alibaba and ByteDance, firms developing their own AI models.
Nvidia considers the demand surge a welcome change, even though availability remains uncertain due to limited supply.
Even so, interest remains high. The H200 offers performance that Chinese firms have not been able to access in recent years.
Uncertainty in China
Despite U.S. approval, Chinese officials are still considering whether to allow H200 imports.
Given the history of the U.S. scrutiny of China, a sudden allowance of advanced chips raises questions.
The H200 is significantly more powerful than the H20 (which used to be the only AI chips allowed). That sharp pivot has drawn skepticism from regulators.
At the same time, China is making efforts to develop homegrown AI chips. National security concerns and competition with the West will continue to influence policy discussions.
