Dec 31 (Reuters) – Nvidia (NVDA) is scrambling to meet strong demand for its H200 artificial intelligence chips from Chinese technology companies and has approached contract manufacturer Taiwan Semiconductor Manufacturing Co (TSM) to ramp up production, sources said.
Chinese technology companies have placed orders for more than 2 million H200 chips for 2026, while Nvidia currently holds just 700,000 units in stock, two of the people said.
The exact additional volume Nvidia intends to order from TSMC remains unclear, they said. A third source said Nvidia has asked TSMC to begin production of the additional chips, and work is expected to start in the second quarter of 2026.
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.
They could also intensify risks for Nvidia, as Beijing has yet to greenlight any shipments of H200 chips. The administration of U.S. President Donald Trump only recently allowed exports of the H200 to China.
The talks between Nvidia and TSMC and details of the Chinese demand have not been reported before. The pricing has also not been reported earlier – Nvidia has decided which H200 variants it will offer to Chinese clients and price them around $27,000 per chip, the sources said.
Nvidia said in response to a request for comment that it continuously manages 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 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.”
TSMC declined to comment and China’s Ministry of Industry and Information Technology did not immediately respond to a request for comment. Reuters spoke to five people for this story, who declined to be named as the discussions are private.
The potential order would mark a significant expansion of H200 production at a time when Nvidia has been focused on ramping up its newer Blackwell and upcoming Rubin chip lines. The H200, part of Nvidia’s previous-generation Hopper architecture, uses TSMC’s 4-nanometer manufacturing process.
Nvidia plans to fulfil initial 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.