Limiting the supply of its top chip amid strong demand is a major strategy that Nvidia (NVDA) employs to sustain product pricing. Unfortunately, Reuters reported that Nvidia told Chinese clients that it might increase production capacity for its H200 AI chips.
Orders for this chip are greater than the current output. That would justify the production hike. Additionally, the White House is no longer enforcing export controls for the powerful chip. Instead, President Trump permitted H200 chip exports to China, provided it paid a 25% fee on those sales.
Customers should not think that H200 chip prices might change. Nvidia would carefully manage its supply chain as output increased. It would ensure that the production increase would not have an impact on the supply chain for the U.S. market.
Nvidia would benefit from increased sales to Chinese technology firms. Alibaba (BABA), ByteDance (privately owned), and many other firms would submit big orders if output increased. Despite the commitment, the Chinese government did not permit those firms to buy Nvidia’s chips. It is fearful that Nvidia would add tracking technology. If it found the chip used outside of China, it would “kill switches” to stop it from working.
In U.S. markets, AI firms want the latest Nvidia chips. Demand for Blackwell remains strong. Looking ahead, American tech firms want the next-generation Rubin chip.
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