Nvidia AI Chip. Photo: Nvidia
Nvidia has experienced a significant boost in orders for its H20 AI chips, largely attributed to the rising popularity of the DeepSeek AI model in China. Contrary to expectations that the advent of DeepSeek, which operates without requiring high computational power, would reduce Nvidia's chip demand, the opposite has proven true.
Major Chinese companies, including Tencent, Alibaba, and ByteDance, have reported incremental increases in their orders for the H20 chip. This information comes from sources cited by Reuters, indicating a trend among not only large firms but also smaller companies in healthcare and education sectors, who are ordering AI servers equipped with H20 chips to run the DeepSeek model.
Historically, before the introduction of DeepSeek, only firms in sectors like finance and telecommunications—with larger budgets—could afford to purchase servers for AI purposes. The H20 chip was specifically created by Nvidia for the Chinese market, designed to comply with U.S. export regulations that limit the capabilities of chips sold to China, especially in the wake of the Biden administration's policies.
Now, as the demand for H20 chips surges, there are indications that the Biden administration's successor, Donald Trump, might be considering stricter measures to ban the export of H20 chips to China. The growing use of DeepSeek, which is less demanding in terms of computational power, could be a key factor in this decision.
While Nvidia has refrained from commenting on the surge in H20 demand, they acknowledge the competitive nature of their products in the market. Similarly, companies like Tencent, ByteDance, and Alibaba have not responded to requests for statements concerning this trend.
The landscape of the AI chip market in China appears to be shifting, and Nvidia's H20 chips seem poised to play a crucial role in this transformation as more companies seek to integrate AI capabilities into their operations.
