This article first appeared on GuruFocus.
Nvidia (NVDA, Financials) is considering increasing production of its H200 artificial intelligence chips after demand from Chinese customers quickly outpaced current supply, according to people familiar with the discussions.
Just days before, U.S. President Donald Trump said Nvidia might sell the H200, its second-most sophisticated AI chip, to China for a 25% charge. Since then, Chinese IT firms have advanced quickly. Alibaba and ByteDance have approached Nvidia about substantial purchases, demonstrating its popularity.
H200 is the most powerful AI processor Chinese firms can get, outperforming Nvidia’s downgraded H20, which was built to comply with export rules. As Chinese cloud providers and organizations rush to develop AI capacity, that performance disparity has driven demand.
Still, considerable obstacles remain. Chinese authorities have not approved H200 transactions and are considering whether authorizing the chip would hamper local alternative development. H200 purchases would have to include locally created chips, according to one suggestion.
Ramping up output is difficult for Nvidia. The business emphasizes its newer Blackwell chips and prepares for the next-generation Rubin platform while vying for TSMC production capacity, limiting supply. How soon Nvidia can transform China’s demand into income depends on the next several weeks.