NVIDIA finds itself in the spotlight as it grapples with surging demand for its Hopper H200 AI chips from Chinese clients. To meet this overwhelming interest, the tech giant is urging TSMC to implement urgent measures within the supply chain.
Soaring Demand Outpaces Supply
Recent reports indicate that NVIDIA has been flooded with orders for as many as 2 million H200 chips for the upcoming year, a figure that far surpasses its current inventory of 700,000 units. This dramatic demand signifies a potential restart in Hopper production, presenting challenges for TSMC and other supply chain partners. NVIDIA must now balance robust Chinese demand with limited supplies elsewhere, raising concerns about the global availability of AI chips.
The moves raise concerns over whether there could be further tightening in global AI chip supplies as Nvidia now has to strike the right balance between meeting robust Chinese demand and addressing constrained supplies elsewhere.
– Reuters
NVIDIA’s dependency on TSMC for its foundry operations poses a significant challenge, particularly as TSMC is already under strain fulfilling orders for Blackwell and related products globally. While semiconductor production might not be the primary hurdle, advanced CoWoS packaging emerges as the critical bottleneck impacting Hopper, Blackwell, and Blackwell Ultra products.
Financial Implications and Future Outlook
Estimates suggest that each H200 AI chip sold in China has an average selling price (ASP) of roughly $27,000. With expected shipments reaching two million units, NVIDIA could potentially generate $54 billion in revenue from China, a figure that dwarfs previous forecasts despite export restrictions. The pressing issue remains whether the AI supply chain can scale to meet such unprecedented global demand, especially as TSMC faces increased CapEX and labor shortages amid soaring partner expectations.
Boasting performance six times greater than the H20 for training workloads, the H200’s allure drives China’s AI sector to place substantial orders. The unfolding narrative between NVIDIA and China promises to exert immense pressure on the supply chain, and the industry’s response will be closely watched.