Key takeaways
- NVIDIA orders 300,000 H20 chips from TSMC due to strong demand in China.
- Resumption of H20 chip sales to China follows previous export restrictions and severe shortages.
- Chinese tech giants like ByteDance and Alibaba benefit from lifted bans, placing $16 billion in GPU orders.
- NVIDIA's CEO confirmed quick deliveries after diplomatic visits, alleviating potential $5.5 billion losses.
- Increased orders reflect a growing market for AI chips amid rising demand from Chinese firms.
NVIDIA has placed orders for 3,00,000 H20 chips to be manufactured by TSMC, its contract manufacturer for AI chips. According to recent reports, this is due to the high demand for these processors in the Chinese market, resulting from the company’s recent announcement to resume shipments of the H20 chips to China.
Following the ban last year, Chinese firms had reported severe shortages, and NVIDIA had warned of a potential $5.5 billion hit to its bottom line in 2025.
This was soon revoked this month when NVIDIA CEO Jensen Huang, fresh from diplomatic visits to Washington and Beijing, confirmed that deliveries would begin quickly. Now that they have, the demand is driving NVIDIA to order more and more from its manufacturer.
Big tech companies in China, such as ByteDance, Alibaba, and DeepSeek, have significantly benefited from the lifting of this ban. ByteDance, Alibaba, and Tencent were also recently reported to have collectively placed orders worth $16 billion for NVIDIA’s H20 GPUs.
R2, the successor to DeepSeek’s widely used R1, which has yet to receive a release date, may have been potentially delayed due to this ban.
Retrospectively, this demand for H20 AI chips from NVIDIA for the Chinese market could potentially accelerate TSMC’s growth. The manufacturing giant recently reached a market capitalisation of approximately $1.03 trillion, matching that of electric carmaker Tesla in valuation.
As of July 22, TSMC’s stock stood at TWD 1,130, with a high of TWD 1,160 and 0.89% growth over the past five trading days. TSMC became only the third semiconductor company, after NVIDIA and Broadcom, to hit the $1 trillion mark.
Despite the ban, NVIDIA chips remain highly in demand in China. Many reports in recent months have detailed various methods by which these chips were being smuggled into the country. Especially after the Trump administration’s export controls, at least $1 billion worth of NVIDIA GPUs were smuggled to China.
