Chinese company warns of Nvidia AI chip shortage

This potential supply shortage could pose a hurdle to China's artificial intelligence (AI) ambitions, just as its tech companies are ramping up investment in AI, according to H3C.

H3C warns of Nvidia AI chip shortage.

“The H20 international supply chain is facing significant uncertainty,” the company said in a statement on Tuesday, adding that current inventories are nearly depleted. H3C cited geopolitical tensions disrupting global trade and the supply of key raw materials as the cause of the uncertainty, and said new shipments are expected to arrive in mid-April. Neither H3C nor Nvidia immediately responded to Reuters’ requests for comment.

Demand for the H20 chip has surged in recent months as companies rush to adopt cost-effective AI models from Chinese startup DeepSeek. Tencent, Alibaba and ByteDance have significantly increased their orders for the H20 since the Chinese AI startup emerged into global consciousness in January, sources told Reuters last month. H3C said its supply plans after April 20 also face uncertainties from changes in raw material policies, shipping disruptions and manufacturing challenges.

In the announcement, H3C said it will distribute the upcoming H20 chips based on a profit-first principle, focusing on stable, long-term customers with higher profit margins from their orders. An industry source who distributes AI servers including those using H20 chips said that H20 processors are currently in short supply in the Chinese market.

"We were told the chips would be available, but when we actually placed the order, we were told they were sold at a higher price," the source added.

US officials are considering restricting sales of H20 chips to China, according to media reports in January. H3C is a major AI chip OEM partner of Nvidia in China, along with other companies such as Inspur, Lenovo and Huawei’s x86 server unit, xFusion.

The H20 chip, the main product Nvidia is allowed to sell in China, comes after the latest round of US export restrictions took effect in October 2023. Washington has banned exports of Nvidia's most advanced chips to China since 2022, concerned that the rival could use the cutting-edge technology to enhance its military capabilities.

Analysts estimate Nvidia will ship around 1 million H20 units in 2024, generating more than $12 billion in revenue for the company. Huawei and Cambricon offer domestic alternatives to the H20.

Since returning to the White House in January, President Donald Trump has increasingly tightened controls, especially on China’s artificial intelligence sector. His administration recently added more than 50 Chinese-related technology companies to its “blacklist.”

Source: https://www.baogiaothong.vn/cong-ty-trung-quoc-canh-bao-ve-tinh-trang-thieu-hut-chip-ai-nvidia-192250327191057763.htm