Today, according to Reuters, sources said that driven by the DEEPSEEK deployment boom, Nvidia's H20 chip orders in China have increased significantly.
H20 orders are booming, and Chinese technology giants are collectively increasing their investment
Since February 2025, China's AI chip market has ushered in a round of explosive growth. According to Cailianshe, Reuters and other media reports, the order volume of Nvidia's H20 artificial intelligence chips customized for the Chinese market has "increased significantly" recently, and technology companies such as Tencent, Alibaba, and ByteDance have become the main purchasers. Six people familiar with the matter revealed that the direct driving force of this phenomenon is the low-cost model deployment boom of the domestic AI company DeepSeek. Since the DeepSeek model entered the global public eye in January, its breakthrough performance of "achieving 90% of GPT-4's power at 1% cost" has quickly stimulated the market's demand for computing power infrastructure, and the H20 chip has become the preferred hardware for enterprises to deploy AI models due to its compliance design and optimized performance for the Chinese market.
How does the DeepSeek model rewrite the logic of AI chip demand?
The success of DeepSeek is not only a technological breakthrough, but also a reconstruction of the industrial ecology. Its low-cost and high-efficiency model training capabilities enable Chinese companies to achieve large-scale AI applications without relying on sky-high top computing power clusters. For example, DeepSeek's reasoning efficiency is nearly 40% higher than that of traditional solutions, and its training cost is only 5% of the industry average. This trend of "computing power popularization" has led to a surge in demand for chips such as H20 that have moderate performance but outstanding cost-effectiveness.
It is worth noting that although H20 is inferior to NVIDIA's flagship product H100 in absolute computing power, its customized design for the Chinese market (such as compliance with US export control requirements) and optimized energy consumption ratio make it outstanding in AI reasoning scenarios. Industry insiders analyzed that this change in demand structure reflects the transformation of China's AI industry from "stacking computing power" to "fine operation".
H20 chip becomes a new focus of Sino-US technology game
Just as H20 orders soared, the containment of the US political circle has escalated again. The Trump administration is reported to be plotting to impose stricter export controls on H20, intending to cut off China's access to advanced AI computing power. This trend is closely related to the technological anxiety caused by DeepSeek - American politicians are worried that even special chips with limited performance may still support China's AI industry to overtake others.
In fact, the birth of H20 is the product of geopolitical games. After the US chip ban on China in 2022, Nvidia reduced the interconnection bandwidth and floating-point computing performance of H20 to make it barely meet export standards. But now, further pressure from Washington may force Nvidia to make a difficult choice between "China market revenue" and "global compliance risks." According to analysts' predictions, if H20 is banned, Nvidia's quarterly revenue in China may lose more than $1.5 billion.
Delivery dilemma under double pressure
The explosive growth on the demand side coincides with the tense moment of Nvidia's global supply chain. On the one hand, the global shortage of consumer graphics card RTX 5090 has spread to the enterprise market, and the contradiction in the allocation of TSMC's 5nm production capacity has intensified; on the other hand, the uncertainty of US policies has led to the extension of the chip logistics cycle. A supply chain source revealed that the delivery cycle of H20 has been extended from 6 weeks to 12 weeks, and some Chinese companies have begun to seek to stock up. This imbalance between supply and demand may give rise to a "gray market" and further disrupt the industry order.
The struggle between local substitution and international competition
In the short term, the hot sales of H20 will continue. The demonstration effect of DeepSeek is attracting more companies to develop lightweight AI models, and the Chinese government's policy support for the construction of intelligent computing centers (such as the "East Data West Computing" project) will further amplify chip demand. But in the long run, two paths are reshaping the market landscape:
1. Accelerated local substitution: Huawei Ascend, Cambrian and other domestic chip companies have risen by taking advantage of the situation, and the performance of their products in specific scenarios has approached the H20 level;
2. International competition is escalating: AMD's MI300 series and Intel's Gaudi 3 are stepping up to seize the AI training market, trying to break Nvidia's monopoly.
This chip boom ignited by DeepSeek may eventually evolve into a turning point in the power structure of the global AI industry. When technological breakthroughs and geopolitics are intertwined, computing power is not only a bargaining chip for commercial competition, but also a fulcrum for national strategy. Nvidia's path to breakthrough may define the technology industry landscape in the next decade.
This paper is from Ulink Media, Shenzhen, China, the organizer of IOTE EXPO (IoT Expo in China)
