United States chipmaker Nvidia is considering increasing output of its powerful H200 processors in response to strong demand from Chinese clients, including major firms such as Alibaba and ByteDance. The move comes after recent U.S. government approval allowing the export of H200 chips to China, subject to a 25 percent fee on sales.
Two sources briefed on the matter told Reuters that Nvidia has informed Chinese customers it is evaluating additional production capacity, as orders have already exceeded current output levels. The H200 is Nvidia’s second-fastest AI chip, designed to accelerate large-scale machine learning and generative AI workloads.
The surge in demand follows President Donald Trump’s announcement earlier this week that U.S. restrictions on Nvidia’s H200 exports to China would be relaxed, provided the company pays the mandated fee. This policy shift has opened the door for Chinese firms to secure advanced AI hardware, which had previously been limited under export controls.
An Nvidia spokesperson confirmed the company is managing its supply chain to ensure licensed sales to authorized customers in China do not affect its ability to serve U.S. clients. “We are managing our supply chain to ensure that licensed sales of the H200 to authorized customers in China will have no impact on our ability to supply customers in the United States,” the spokesperson said.
Industry analysts note that the decision underscores both the global demand for advanced AI chips and the delicate balance Nvidia must maintain between U.S. regulatory compliance and international market opportunities. The H200, built on advanced semiconductor technology, is seen as critical for powering next-generation AI applications, from large language models to enterprise-scale data processing.
While discussions remain private, sources suggest Nvidia is leaning toward adding new capacity to meet Chinese demand. The company has not disclosed specific timelines or production targets, but any expansion would likely involve coordination with Taiwan Semiconductor Manufacturing Company (TSMC), its primary foundry partner.
The development highlights the growing importance of AI hardware in global technology competition and the strategic role of U.S. semiconductor firms in shaping access to cutting-edge computing power.
