Nvidia Corp. (NASDAQ:NVDA) is pressing ahead with its China strategy as demand for advanced AI chips remains strong, even while regulatory bottlenecks and supply constraints complicate deliveries.
Jensen Huang Signals Confidence In China Demand
The chip designer founder and CEO, Jensen Huang, expressed optimism about strong H200 demand in China during the World Economic Forum on January 21, 2026.
This confidence persists even as Chinese customs officials hold these high-performance chips at the border.
While Washington recently granted Nvidia formal permission to ship the H200 to the world’s second-largest economy, some orders remain trapped in a state of extreme sensitivity, SCMP reported on Thursday.
Regulatory Uncertainty Pushes Buyers To Costly Alternatives
Chinese AI firms were forced to chase expensive black-market hardware and lower-performing domestic alternatives, such as Huawei’s Ascend series.
Resellers in China reported that black-market servers containing 8 H200 GPUs are currently commanding a 50% premium at roughly 2.3 million yuan ($330,403).
Despite these hurdles, Jensen Huang plans to visit China this month to help reopen the market.
Taiwan Industry Economics Services research fellow Arisa Liu said Nvidia’s China dilemma reflects a choice between near-term performance and long-term strategy, but warned that China’s tech sector could face more profound and more widespread short-term damage.
Supply Crunch Builds As China Orders Surge
At the same time, global demand for AI hardware continues to tighten supply.
A December report indicated that global demand for AI hardware continues to strain supply, and Nvidia is feeling the pressure as strong interest from China collides with limited chip capacity and policy uncertainty.
Chinese tech firms are placing heavy orders for Nvidia’s H200 AI chips, prompting the company to urge Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) to raise output.
Reports indicate Chinese customers have lined up orders for more than 2 million H200 chips for 2026, far exceeding Nvidia’s current availability of roughly 700,000 units.
To close the gap, Nvidia has asked Taiwan Semiconductor to begin building additional capacity, with production work expected to start in the second quarter of 2026.
Nvidia has priced China-bound H200 variants at about $27,000 per chip, with terms varying by volume.
An eight-chip module can run close to 1.5 million yuan, higher than the prior H20 system.
ByteDance is among the largest spenders, with plans to allocate about 100 billion yuan to Nvidia chips in 2026.
Nvidia became the first company to reach a market cap of $4.5 trillion in October.
NVDA Price Action: Nvidia shares were down 0.49% at $183.94 during premarket trading on Friday, according to Benzinga Pro data.
Photo by Robert Way via Shutterstock
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