Introduction:
NVIDIA, the AI chip powerhouse, is caught between surging demand and production gridlock. While U.S. authorities recently cleared Nvidia H20 chip exports to China, a fresh roadblock has emerged—Taiwan’s TSMC has no room on its N4 lines to restart production. Think of it like trying to board a fully booked train during a rush hour—permission to ride doesn’t mean you get a seat.
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Quick 5-Point Overview:
Low H20 Stock: NVIDIA warned Chinese clients about tight H20 inventory.
TSMC’s N4 Capacity Full: Production slots reassigned after April export ban.
Restart Delay: Reclaiming fab capacity could take 6–9 months.
China AI Demand Soars: Forecasted to take 49% of foreign AI chip imports.
New China Chips Ready: RTX PRO 600 and B30 expected by late 2025.
techovedas.com/the-h20-backfire-why-nvidia-is-destroying-4-5-billion-in-china-bound-ai-chips
U.S. Ban and Its Domino Effect
In April 2025, Washington expanded chip export restrictions targeting China. NVIDIA had to cancel H20 shipments and release reserved manufacturing slots at TSMC.
The H20, built on the advanced Hopper architecture and TSMC’s 5nm N4 process, was tailored for AI workloads, especially in Chinese data centers.
When CEO Jensen Huang visited Beijing last week, he confirmed the U.S. Bureau of Industry and Security (BIS) would allow exports again—subject to license applications.
But restarting production isn’t just a matter of policy—it’s also about capacity.
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TSMC N4: A Packed Freeway with No Exit
Imagine TSMC’s N4 fabrication line as a highway at full capacity. NVIDIA had an express lane before, but the export ban pushed it off.
Now, other clients have filled every lane. Returning means waiting in a traffic jam that could last months.
According to TSMC’s Q2 2025 financials, 5nm chips—including N4—contributed 36% of the company’s revenue.
Demand from smartphone, automotive, and data center clients keeps those lanes jammed.
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Current Market Snapshot
| Metric | Status |
|---|---|
| Nvidia H20 chip Inventory in China | Low (covers 4–8 weeks of demand) |
| TSMC N4 Capacity | 100% Utilized |
| Reorder Timeline | 6–9 months delay expected |
| China AI Chip Share (TrendForce) | 49% (up from 42% earlier in 2025) |
| NVIDIA’s New China Chips | RTX PRO 600 (H2 2025), B30 (Q4 2025) |
Licensing Maze and Supply Chain Gaps
Chinese customers must apply for BIS licenses, providing detailed H20 chip quantities and usage cases.
Many firms consider routing requests through domestic data centers or IDCs to reduce political friction.
So far, no major upstream H20 reorders from suppliers like TSMC have surfaced, signaling short-term supply sufficiency—but also cautious demand.
techovedas.com/blackwell-goes-east-nvidia-builds-china-specific-ai-chips-post-h20-ban
China’s AI Demand Keeps Climbing
AI infrastructure in China continues to boom. From large language models to edge computing, Chinese cloud firms, telcos, and research centers need powerful chips.
TrendForce revised its estimate for China’s share of foreign AI chip purchases from 42% to 49% due to sustained demand and low domestic production.
NVIDIA’s Backup Plan: China-Specific Chips
To bridge the gap, NVIDIA plans two new China-only chips:
- RTX PRO 600: Powered by the new Blackwell GPU, expected in H2 2025.
- B30 AI Chip: Slightly less powerful than H20, 30–40% cheaper, launching in Q4 2025.
These products aim to comply with U.S. trade rules while still serving China’s AI growth.
Strategic Analogy: NVIDIA’s Chip Pipeline is Like an Irrigation System
Think of NVIDIA chip supply as an irrigation system for a booming AI farm in China. The U.S. ban shut the main valve (H20 production).
Even though the faucet is open again, the water (chips) can’t flow—because TSMC’s pipelines are already delivering to others.
Meanwhile, the crops (Chinese AI sector) still need watering. NVIDIA must now build new side channels (RTX PRO 600, B30) to meet demand and prevent drought.
techovedas.com/330-billion-investment-boost-nvidias-ai-chips-drive-startup-growth/
Conclusion:
NVIDIA H20 isn’t just a chip—it’s a lifeline for China’s AI ambitions. But with TSMC’s capacity maxed out and U.S. license hurdles in place, NVIDIA must act fast. It bets on new chips tailored for China to regain ground.
Whether this strategy works will depend on how quickly those new tributaries—RTX PRO 600 and B30—can deliver water to thirsty AI fields.
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