Chinese technology giant went on a frenzy, purchasing over 2 million H200 chips. NVIDIA Corporation (NVDA.US) sought urgent production expansion help from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US).

According to sources, NVIDIA Corporation (NVDA.US) is making efforts to meet the strong demand from Chinese technology companies for its H200 artificial intelligence chip and has been in contact with the foundry Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) to increase production. Two sources said that Chinese technology companies have ordered over 2 million H200 chips for 2026, while NVIDIA Corporation currently only has a stock of 700,000 chips. They stated that the specific quantity that NVIDIA Corporation plans to add to its order with Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is not yet clear. A third source mentioned that NVIDIA Corporation has requested Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to start production of additional chips, expected to begin in the second quarter of 2026. The sources said that NVIDIA Corporation has decided on which H200 models to provide to Chinese customers, priced at around $27,000 per chip. This potential order will mark a significant increase in H200 production, as NVIDIA Corporation has been focusing on increasing production of its updated Blackwell and upcoming Rubin chip series. It was previously reported that NVIDIA Corporation plans to fulfill initial orders using existing inventory, with the first batch of H200 chips expected to be delivered before mid-February, ahead of the Chinese Lunar New Year. These reports have raised concerns about the possibility of further tightening in global AI chip supply, as NVIDIA Corporation now needs to strike a balance between meeting strong demand in the Chinese market and addressing supply constraints in other regions. Earlier this month, US President Trump announced permission for NVIDIA Corporation to sell its H200 chips to China, with the US collecting a 25% share of the related chip exports. However, this may also increase the risks faced by NVIDIA Corporation since they have not yet been granted permission to sell their H200 chips in China. In response to requests for comments, NVIDIA Corporation stated that it continues to manage its supply chain. A spokesperson for NVIDIA Corporation said: "Authorizing the sale of licensed H200 chips to customers in China will not affect our ability to supply customers in the US." "China is a competitive market, with domestic chip suppliers rapidly growing. A blanket export ban hurts our national and economic security, benefiting only foreign competitors." Chinese tech giants drive demand Two sources mentioned that the majority of the over 2 million chip orders for 2026 come from major Chinese internet companies, who see the H200 as a significant upgrade from the currently available chips. One source stated that out of NVIDIA Corporation's current stock of 700,000 chips, around 100,000 are GH200 Grace Hopper super chips (which combine NVIDIA Corporation's Grace CPU with Hopper GPU architecture), while the rest are independent H200 chips. This person stated that both models will be provided to Chinese customers. While NVIDIA Corporation has provided a rough pricing range to Chinese customers, the specific prices will vary depending on the quantity purchased and specific customer arrangements. They mentioned that an eight-chip module is expected to cost around 1.5 million RMB, slightly higher than the no longer available H20 module (previously priced at around 1.2 million RMB). However, considering that the performance of the H200 is approximately six times that of the H20 (the H20 being a downgraded chip designed specifically for the Chinese market by NVIDIA Corporation), Chinese internet companies find the pricing attractive. On Wednesday, reports stated that ByteDance plans to spend about 100 billion RMB on NVIDIA Corporation chips in 2026, higher than the approximately 85 billion spent in 2025, provided that NVIDIA Corporation is allowed to sell its H200 chips in China.