Nvidia Taps TSMC to Boost H200 Output As China Demand Accelerates

Nvidia has approached Taiwan Semiconductor Manufacturing to ramp up production of its H200 artificial intelligence chips as demand from Chinese technology companies accelerates, Reuters reported on Wednesday.

Chinese technology firms have placed orders for more than 2 million H200 chips for delivery in 2026, while Nvidia currently holds about 700,000 units in inventory, Reuters reported, citing sources familiar with the matter.

The U.S. chipmaker has asked TSMC to begin producing additional H200 chips, with work expected to start in the second quarter of 2026, the report said. The exact volume Nvidia intends to order from TSMC remains unclear.

The talks with TSMC, the scale of Chinese demand and pricing details have not been reported previously, according to Reuters.

The potential expansion comes as Nvidia is focused on ramping up its newer Blackwell chips and preparing its next-generation Rubin line. The H200 belongs to Nvidia's prior-generation Hopper architecture and is produced using TSMC's 4-nanometer manufacturing process.

The discussions also raise concerns about further tightening in global AI chip supplies, as Nvidia balances strong Chinese demand against constrained availability elsewhere.

Regulatory risks remain a key factor. Beijing has yet to approve any shipments of H200 chips, even though the administration of U.S. President Donald Trump only recently allowed exports of the chip to China.

Per the report, Nvidia has decided which H200 variants it will offer Chinese customers and plans to price them at around $27,000 per chip, with final pricing varying by purchase volume and customer arrangements.

Nvidia told Reuters it continues to actively manage its supply chain.

"Licensed sales of the H200 to authorised customers in China will have no impact on our ability to supply customers in the United States," a spokesperson reportedly said.

"China is a highly competitive market with rapidly growing local chip suppliers. Blocking all U.S. exports undercut our national and economic security and only benefited foreign competition," it added. Nvidia taps TSMC to boost H200 output as China demand surges

Nvidia plans to fulfill initial Chinese orders from existing stock, with the first batch of H200 chips expected to arrive before the Lunar New Year holiday in mid-February, Reuters reported earlier this month.

Of Nvidia's current inventory, around 100,000 units are GH200 Grace Hopper superchips, which combine Nvidia's Grace CPU with the Hopper GPU architecture, while the remainder are standalone H200 chips. Both variants will be made available to Chinese clients, the Wednesday report said.

Demand has been driven largely by major Chinese internet companies, which view the H200 as a substantial upgrade over chips currently available to them. An eight-chip H200 module is expected to cost around 1.5 million yuan, compared with roughly 1.2 million yuan for the now-unavailable H20 module, according to Reuters.

The H200 delivers roughly six times the performance of the H20, a downgraded chip Nvidia designed specifically for China that was later blocked from shipment into the country. Chinese internet companies see the pricing as attractive, the report said.

The pricing represents an estimated 15% discount to grey-market alternatives, which currently sell for more than 1.75 million yuan, per the report.

Source: Investing