H200 Chinese market volume countdown! CUDA supports strong demand NVIDIA Corporation (NVDA.US) AI empire welcomes "incremental benefits"

NVIDIA CEO Huang Renxun stated that the chip giant is launching the production of H200 AI training/inference accelerators based on the Hopper architecture introduced in March 2022 for customers in the Chinese market. This indicates that the efforts of this American chip company to re-enter the crucial AI computational infrastructure market in China have made positive progress. If the H200, facing an additional 25% cost/U.S. government tariff, can flow to the Chinese market on a large scale, it will be a substantial boost for NVIDIA's fundamental expansion prospects, especially as the company's stock price has been stagnant lately. The fact that NVIDIA Corporation's official quarterly performance guidance and the "Super AI Blueprint" worth at least a trillion dollars by 2027, announced at the GTC conference on Monday, did not take into account the revenue prospects of the Chinese market. Huang Renxun made a significant announcement at the NVIDIA Corporation's GTC conference and unveiled the next-generation AI computational infrastructure - Vera Rubin architecture AI computational system. He stated that NVIDIA Corporation has obtained U.S. government permission to sell H200 AI chips to "many large customers in the Chinese market" and is currently in the process of "restarting our large-scale manufacturing." He emphasized that this prospect is completely different from a few weeks ago. The H200 supply chain is being restarted, Huang Renxun said during an event at NVIDIA Corporation's annual GTC conference in San Jose, California. The CEO of the chip company Huang Renxun had unveiled a series of new products and provided financial updates to investors at the opening ceremony of the GTC conference the day before. In recent years, NVIDIA Corporation has been striving to restore the sales of its AI chips in the Chinese market. Due to long-standing chip export restrictions by the U.S. government on China, NVIDIA Corporation's once massive market in China has essentially been closed to this type of AI computational infrastructure products. However, since the beginning of this year, the Trump administration has begun allowing NVIDIA Corporation and its strongest competitor, AMD, to sell less powerful versions of their AI chips to the Chinese market, but this still requires formal approval from the U.S. government and faces a 25% tariff. The U.S. government allows NVIDIA Corporation's H200 to be exported to China under certain conditions, with a 25% cost/tariff as a "trade-off." This arrangement is actually a policy compromise, allowing export while also collecting revenue. In contrast, higher-end AI chip products such as the Blackwell series architecture and the AMD Instinct MI450 series are still considered more sensitive technologies at the U.S. policy level and are therefore not part of the current export license range. This means that they are simply not allowed to be exported and are not subject to such tariff policies. It should be noted that this semiconductor tariff policy on NVIDIA Corporation and AMD excludes chips used in U.S. domestic data centers, consumer devices, and industrial applications, meaning that these tariffs do not apply to H200/MI325X chips that are directly deployed and used in the U.S. Currently, NVIDIA Corporation has not included any revenue prospects for data centers in the Chinese market in its financial forecasts. The data center business unit, which is currently NVIDIA Corporation's core business unit, offers H100/H200 and Blackwell/Blackwell Ultra architecture AI GPUs, providing incredibly powerful AI computational infrastructure for data centers worldwide. During a performance phone call last month, the company stated that it had only received preliminary approval from the U.S. government to ship a small number of H200 AI chips to the Chinese market. Although the comprehensive performance of the H200 is far inferior to the Blackwell/Blackwell Ultra architecture AI chips currently used by NVIDIA Corporation for training and running large-scale artificial intelligence models, it is still popular in the sanctioned Chinese market due to its strong AI inference performance, CUDA ecosystem that dominates the global AI developer ecosystem, and convenient deployment capabilities. China used to account for a quarter of NVIDIA Corporation's total revenue, but now only represents a small fraction. Despite strong global demand for NVIDIA Corporation's AI chips, this Asian country remains the world's largest single semiconductor market, making its long-term fundamental prosperity crucial for NVIDIA Corporation. NVIDIA Corporation had obtained verbal approval from U.S. President Donald Trump last December to sell H200 to some Chinese customers, but the company has yet to confirm any revenue from H200 in the Chinese market as of now. Washington's manufacturing and tariff rule-setters have also set several additional obstacles, slowing down the formal approval process and making the possibility of fully restoring sales without sanctions constraints less likely. With Huang Renxun's latest statement that the H200 AI chip is currently in the process of "restarting our large-scale manufacturing," NVIDIA Corporation may soon confirm revenue data from the Chinese market for the H200. Media reports have previously stated that H200 AI chips shipped to the Chinese market need to undergo additional routine inspections by the U.S. and are subject to a 25% tariff. U.S. officials are also considering limiting the number of H200 AI chips that each Chinese customer can purchase to 75,000 chips, with a total shipment volume of up to 1 million processors. The demand for H200 AI chips in the Chinese market itself is likely to be very strong, with the core limiting factor for transactions being U.S. government policies and approvals, not demand. Recent reports have shown that Chinese tech companies have already placed orders for over 2 million H200 AI chips, but NVIDIA Corporation's inventory at that time was only about 700,000 H200 chips. For Wall Street institutions, this is not a grand narrative of "NVIDIA Corporation rebounding with the Chinese market" but rather an additional space for potential gains in the robust global AI computational infrastructure investment wave centered on AI hardware. NVIDIA Corporation's stock price fell by 0.7% to $181.93 at the close of U.S. trading on Tuesday, bringing its cumulative decline for the year to 2.5%, trailing the S&P 500 index. From a fundamental perspective, if the H200 AI chip can flow into the Chinese market on a relatively large scale, it would be a substantial boost for NVIDIA Corporation, considering that China once accounted for about a quarter of its revenue, which has now reduced to a small fraction. In addition, the company's strong performance guidance for this quarter given in February did not include any revenue prospects from Chinese data centers, and the company's recent outlook for revenue from Chinese data centers remains zero. Therefore, as long as H200 shipments begin to normalize, even if not fully liberalized, it would still represent an incremental level of upward revision to the current valuation model and market growth expectations for NVIDIA Corporation. In terms of underlying comprehensive performance, the H200 is significantly behind the current Blackwell architecture and the Vera Rubin architecture that Huang Renxun has just announced will start production at the end of the year, let alone future generations. The H200 belongs to the classic Hopper architecture, with a single card specification of 141GB HBM3e, 4.8TB/s bandwidth, and about 4 PFLOPS FP8. NVIDIA Corporation has officially demonstrated that the GB200 NVL72 can achieve up to 15 times the performance/revenue advantage in certain inference scenarios compared to the Hopper H200. Furthermore, Vera Rubin's official statement is that it will achieve a 10 times per watt performance improvement and a 10 times lower token cost compared to Blackwell. However, this doesn't seem to hinder the popularity of the H200 in the restricted Chinese market as it offers lower prices without sanctions constraints. The H200 provides nearly 6 times the performance improvement of the previously launched H20 AI chip for the Chinese market, which is attractive for enterprises needing mature chips that can be immediately deployed, run large model inferences, have larger memory, and higher bandwidth under the wave of global AI inference. NVIDIA Corporations' AI GPU has almost monopolized AI training and requires more powerful AI computing clusters for general use and fast iteration capabilities for the entire computing system, while the AI inference side emphasizes unit token cost, latency, and energy efficiency after the scale-out of cutting-edge AI technologies. "The era of artificial intelligence inference has arrived," Huang Renxun said at the GTC conference on Monday. "And the demand for inference is still rising," he added. Therefore, the 141GB HBM3e of the H200 is still very attractive for enterprises needing long contexts, large-scale batches, enhanced retrieval, and high-efficiency batch deployment of AI inference clusters, paired with the strong demand driven by the CUDA ecosystem, it is still considered "high-end available computing power under restricted conditions" for the Chinese market. Meanwhile, the CUDA, CUDA-X, ready-to-use model adaptation, development tools, and operational experiences significantly lower the migration and deployment costs for Chinese customers. For Wall Street giants Morgan Stanley, Citigroup, Loop Capital, and Wedbush, the investment wave surrounding AI computational hardware as the core of global artificial intelligence infrastructure is far from over but is just the beginning. With the unprecedented "AI inference computational power demand storm," the global overall AI infrastructure investment wave is expected to reach a scale of $3 trillion to $4 trillion through 2030.