This week, at the Consumer Electronics Show (CES) in Las Vegas, Nvidia CEO Jensen Huang appeared confident despite the complex geopolitical challenges facing the company.
Standing before a packed crowd, Huang confirmed the substantial Chinese demand for Nvidia’s advanced H200 artificial-intelligence processors. “We’ve fired up our supply chain, and H200s are flowing through the line,” he said Tuesday during a Q&A session. “We’re getting the last details of the licensing finished with the U.S. government.”
Despite Huang’s confident statements, Nvidia faces a complicated set of regulations that make selling these chips unusually difficult. The company has asked TSMC to increase production, but it must deal with two major challenges: a 25% tax from the U.S. government and a policy from Beijing that pushes customers to buy from local competitors.Frenzy in the supply chainNvidia is acting quickly to capitalize on what it sees as a new opportunity. People familiar with the situation say the company has officially asked TSMC to make more H200 chips to meet rising demand from Chinese tech companies.
The data shows a significant demand for computing power. Chinese tech giants like ByteDance and Alibaba have reportedly placed orders for more than 2 million H200 chips, with deliveries scheduled for this year. This demand is well above Nvidia’s current stock of about 700,000 units, so the company plans to start additional manufacturing runs in the second quarter of 2026.Each chip costs about $27,000 and represents a significant improvement over earlier H20 processors sold in China. But delivering these orders is not just a matter of logistics—it also depends on political stability. As Huang said on Tuesday, “The future ships on schedule; the present ships when it’s allowed to.”Washington’s price of admissionThe resumption of high-end chip sales to China follows a chaotic period of policy shifts in Washington. The Biden administration had previously instituted a broad ban on advanced AI semiconductors to thwart China’s military modernization.
In a major change, President Donald Trump recently allowed the export of the H200 to “approved customers,” but added a new rule: 25% fee on sales revenue must go to the U.S. Treasury. To sell to China, Nvidia must first ship the chips to the U.S., pay the 25% as an import tax, undergo a “security inspection,” and then send the chips to Chinese customers.
