Chinese Companies Increase Orders for Nvidia's H20 Chips to Integrate DeepSeek

Recent reports indicate that major Chinese corporations, including Alibaba, ByteDance, and Tencent, are significantly increasing their orders for Nvidia's H20 chips. This surge in demand is largely attributed to the growing necessity for integrating the artificial intelligence models developed by the Chinese startup, DeepSeek, into various products and services.

Since the beginning of 2025, there has been a notable uptick in demand for the comparatively affordable AI models offered by DeepSeek, which has had a positive impact on Nvidia's sales. The H20 chips, recognized as some of the most powerful AI accelerators that Nvidia is permitted to export to China, are now in high demand among Chinese firms.

In 2022, restrictions were placed on Nvidia's ability to sell advanced GPU accelerators to China, limiting exports to less capable models. Although Nvidia initially circumvented these restrictions with modified versions of their chips, the U.S. government imposed tighter regulations in 2023, prohibiting the export of these downgraded A800 and H800 models. The H20 chip, based on the Hopper architecture, has been designed to comply with these export limitations.

Despite initial reluctance from Chinese companies to adopt Nvidia's export-compliant chips, the rise of DeepSeek has prompted a shift in this trend. According to sources cited by Reuters, Chinese tech giants like Tencent and Alibaba have ramped up their orders for the H20 chips. These chips are essential for incorporating DeepSeek's AI capabilities into their products, and they are also made available to other companies in China via cloud services.

Moreover, smaller enterprises in sectors such as healthcare and education are reportedly purchasing AI servers equipped with Nvidia's H20 chips and DeepSeek models. Previously, the market for such technology was dominated by larger financial and telecommunications companies.

Amid these developments, there are concerns that the new U.S. administration may impose additional restrictions on H20 exports to China. Internal discussions regarding stricter export controls have reportedly taken place, with considerations initiated during the previous Biden administration. These measures aim to prevent advanced AI accelerators from being utilized to enhance Chinese military capabilities, which could further drive the demand for H20 chips.

Chinese firms, including Tencent and Alibaba, have not publicly commented on these reports, but they have previously expressed intentions to integrate DeepSeek's AI models into their offerings. Notably, Tencent plans to incorporate this technology into WeChat, a crucial application in China that facilitates messaging and payment transactions. Additionally, Great Wall Motor (GWM), a Chinese automotive manufacturer, has already integrated DeepSeek models into its connected vehicle systems.

Market analysts estimate that Nvidia shipped approximately one million H20 chips in the previous year, generating over $12 billion in revenue. This figure surpasses earlier predictions for 2024. According to reports, Microsoft is the largest purchaser of Nvidia's AI accelerators, followed by ByteDance and Tencent. However, combined purchases from Chinese companies reportedly account for less than half a million AI chips, with Alibaba not mentioned in the analysis.

Nvidia has refrained from disclosing specific figures regarding its exports to China, stating only that its products have successfully distinguished themselves in a highly competitive market. The company is expected to release new financial results soon, which will shed light on the impact of these developments on its revenue.