China’s leading tech firms, including ByteDance, Alibaba (HK:9988), and Tencent (HK:0700), have reportedly stockpiled close to one million units of Nvidia’s (NASDAQ:NVDA) H20 AI chips in anticipation of tightened U.S. export restrictions, according to Nikkei Asia. The bulk purchases—valued at over $12 billion—aimed to secure nearly a year’s supply before the April export ban took effect.
The H20 chip, a scaled-down version of Nvidia’s high-performance H100, is tailored to meet U.S. export controls and is widely used for AI inference tasks. Demand for AI computing in China is soaring, driven by the rapid growth of AI-powered applications like DeepSeek, now integrated into Tencent’s WeChat.
ByteDance is believed to have led the aggressive procurement push, placing expedited orders worth billions. Several billion dollars’ worth of H20 chips were delivered before the new rules were enforced earlier this month. Nvidia has since projected a $5.5 billion revenue impact for the first quarter due to the curbs.
With access to Nvidia’s advanced chips now restricted, Chinese firms are pivoting toward domestic alternatives like Huawei’s Ascend AI chips. Some are also exploring workarounds, such as setting up subsidiaries abroad, to maintain access to cutting-edge AI hardware.
This strategic stockpiling underscores the escalating U.S.-China tech tensions and highlights the growing urgency among Chinese tech giants to secure AI processing power amid rising regulatory uncertainty. The AI chip race is increasingly shaping the competitive dynamics of global technology markets, with semiconductor access emerging as a key battleground.
