Supply Chain Shift: Nvidia Targets 2026 Production Increase as China Seeks Two Million H200 Units

In response to an unprecedented surge in demand from Chinese technology firms, Nvidia is reportedly coordinating with Taiwan Semiconductor Manufacturing Co (TSMC) to expand production of its H200 artificial intelligence processors. Sources indicate that Chinese entities have requested more than 2 million units for 2026, a figure that far exceeds Nvidia's current inventory of approximately 700,000 chips. While the precise scale of the new manufacturing order is not yet public, production is tentatively scheduled to commence in the second quarter of 2026. This surge in procurement underscores a potential strain on the global semiconductor supply chain as Nvidia seeks to satisfy Chinese interest without compromising its commitments to other international markets.

The geopolitical landscape adds a layer of complexity to these transactions, as the H200's entry into the Chinese market remains subject to regulatory approval from Beijing. Although the Trump administration recently authorized the export of these chips—reversing previous restrictive policies—Chinese officials are still evaluating whether to permit the imports or if doing so might hinder the growth of domestic semiconductor alternatives. To mitigate this, one regulatory proposal suggests that Chinese firms may be required to purchase a specific ratio of homegrown chips alongside their Nvidia orders.

Nvidia has reportedly priced the H200 at approximately $27,000 per unit, with eight-chip modules expected to cost around 1.5 million yuan. Despite this being a higher price point than previous models, Chinese internet giants, including ByteDance, view the investment as highly efficient given that the H200 offers six times the performance of the earlier, downgraded H20 variant. Furthermore, this official pricing remains more competitive than grey-market alternatives. Nvidia has maintained that these licensed sales will not affect its ability to serve the United States market, emphasizing that a total export ban would ultimately undermine national security by empowering foreign competitors and local Chinese suppliers.