Nvidia Ready to Increase H200 Chip Production, as Demand from China Explodes

Illustration of Nvidia H200 Chip (photo: x @business)

JAKARTA - Nvidia is reviewing plans to increase production capacity of H200 artificial intelligence chips after receiving a surge in orders from major Chinese technology companies, exceeding current production capacity.

This move comes shortly after US President Donald Trump announced that Washington would allow exports of H200 chips to China, provided that the US government charges a fee of 25% for each sale.

Industry sources said demand from China was so strong that Nvidia was inclined to increase production capacity to meet the market. A number of Chinese technology giants, including Alibaba and ByteDance, are said to have contacted Nvidia this week to express interest in making large-scale purchases.

The H200 chip, which began mass production last year, is the fastest processor in the Hopper family and is the second fastest AI chip ever produced by Nvidia. This chip is made by Taiwan Semiconductor Manufacturing Company (TSMC) using a very advanced 4 nanometer fabrication technology, making it a crucial component for the development of large-scale AI models.

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However, the green light from Washington does not automatically mean that the transaction will run smoothly. The Chinese government is reportedly still considering the impact of the entry of H200 chips on the domestic semiconductor industry.

A number of Beijing officials even held an emergency meeting to discuss whether the massive purchase of Nvidia chips would actually hinder the growth of local AI chip manufacturers.

One of the schemes being discussed, according to media reports, is requiring Chinese companies that buy H200 to bundle the purchase with domestically produced chips in a certain ratio. The goal is clear: protect the local industry from being left behind by superior foreign technology.

On the other hand, increasing H200 production is not easy for Nvidia. Currently, the production volume of the chip is relatively limited because the company has shifted its main focus to the latest generation architecture Blackwell as well as the upcoming Rubin line.

This situation is complicated by the tight competition for advanced manufacturing capacity at TSMC, where Nvidia also has to compete with other major players such as Alphabet, the parent company of Google.

The combination of China's soaring demand, rapidly changing geopolitical regulations, and production capacity constraints makes Nvidia's move a real test. In the AI world, chips are the new currency, and everyone is scrambling before the stock is completely depleted.