Nvidia Faces Fresh China Setback As Chip Shortages And Sanctions Disrupt Supply

Chinese semiconductor companies continue to face the Nvidia Corp NVDA chip crisis amid Washington’s semiconductor sanctions on China.

Chinese server maker H3C highlighted a possible Nvidia H20 chip crisis to Reuters, adding that current inventory was nearly depleted.

H3C told Reuters that supply plans beyond April 20 also face uncertainties from raw material policy changes, shipping disruptions, and production challenges.

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The Chinese server maker told Reuters it would distribute incoming H20 chips, prioritizing long-term customers with higher profit margins on their orders.

H3C attributed the crisis to geopolitical tension and said new shipments were expected by mid-April 2025.

Chinese AI startup DeepSeek’s cost-effective AI models have triggered demand for H20 chips. Tencent Holding TCEHY, Alibaba Group Holding BABA, and ByteDance ramped up orders of the H20 since DeepSeek emerged.

H3C is a major OEM partner for Nvidia’s AI chips in China. Reportedly, China urged firms like Alibaba and Tencent to avoid Nvidia chips, while Huawei Technologies Co doubled the yield rate of AI chips.

China has also introduced energy efficiency rules for using advanced chips that would prevent Chinese companies from buying Nvidia’s tailor-made processors. Reportedly, Nvidia’s tailor-made chip for China, H20, failed to comply with China’s National Development and Reform Commission’s new rules.

Price Action: NVDA stock is down 0.98% at $112.68 at the last check on Thursday.

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