AI chip giant NVIDIA Corporation is finding it difficult to fulfill orders of its China-specific H20 GPU after the Trump administration decided to relax restrictions and grant export control licenses of the chip. While the H20 is NVIDIA's latest AI GPU that is cleared to be sold to Chinese firms, it is still behind the firm's leading-edge products in terms of performance. As a result, most of the firm's production contracts focus on newer or more powerful chips to create constraints, and a new report from The Information suggests that NVIDIA doesn't plan to restart the production of the China-specific GPUs.
NVIDIA Struggles To Meet Chinese H20 Orders Due To Production Constraints, Says Report
NVIDIA's announcement that it was expecting the Trump administration to grant licenses for its H20 GPUs came as CEO Jensen Huang was visiting China. The news of H20 sales resuming in China generated reports that NVIDIA might face difficulties in fulfilling all the orders it was receiving in China. Huang was asked about the potential difficulties and responded that NVIDIA might find it harder to recover some of its written-off inventory. "We'll compare what customers would like to buy now vs inventory we have," said the executive and added that "it's probably not 100%, but it's not 0% either."
Now, a fresh report from The Information suggests that NVIDIA might not restart its H20 production as the lines dedicated to the China-specific GPU by contract chip manufacturer TSMC have been repurposed for other chips. The firm's existing inventory includes finished H20 chips as well as those that are yet to be packaged. The Information refers to the latter as "wafers in production," but it is unclear which production stage the publication is referring to.
The report adds that prior to the Trump administration's decision to require, NVIDIA had been designing an upgrade to the H20 for its Chinese customers. The H20 is a toned-down version of NVIDIA's GPUs that are designed with the Hopper architecture. The firm's latest GPUs are its Blackwell lineup, which are currently shipping to countries and companies that are not subject to US AI GPU restrictions.
Market reports have also suggested NVIDIA is developing a Blackwell-specific chip for its Chinese customers. CEO Huang has left the option of selling advanced chips to China open but accepted that the sales will depend on US approval. Today's report also suggests that NVIDIA might be facing memory chip constraints from SK hynix as the Korean memory company has informed NVIDIA that it might find it difficult to supply higher-end memory chips for the newer H20 GPUs that NVIDIA might ship to China.
With NVIDIA's earnings now due, the firm has entered its quiet period and cannot comment on market rumors. Investors will eagerly watch the numbers to determine the extent of tailwinds that the firm could generate from resuming sales to China, among other variables, including cost control, at the upcoming results.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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