Chinese tech firms go on a $16B Nvidia AI chip buying spree despite US curbs

China’s hefty investment in H20 chips reflects its commitment to AI innovation despite US export restrictions, as it strengthens efforts to build a self-reliant chip industry, potentially transforming the global semiconductor landscape in the coming years

Leading Chinese tech firms, including ByteDance, Alibaba Group, and Tencent Holdings, have placed orders totalling at least $16 billion for Nvidia’s H20 server chips in the first three months of 2025, according to reports citing industry insiders.

The surge in demand highlights China’s growing reliance on high-performance computing power for artificial intelligence (AI) development, particularly as US export controls continue to limit access to more advanced semiconductor technology.

The H20 chip, which Nvidia launched in response to Washington’s tightened trade restrictions in late 2023, remains the most powerful AI processor that the company can legally supply to China. Industry analysts attribute the spike in orders to a booming AI sector, particularly startups like DeepSeek, which focus on low-cost AI models optimized for the Chinese market.

Rising geopolitical and trade tensions

Since 2022, the US government has imposed stringent restrictions on the sale of Nvidia’s most advanced chips to China, citing national security concerns. American officials fear that cutting-edge AI processors could be used to enhance China’s military capabilities, leading to an ongoing technology standoff between the world’s two largest economies.

In a further escalation, former US President Donald Trump announced in February his intention to introduce a 25% tariff on semiconductor imports, a move that could have broad implications for the global tech industry.

Nvidia’s strategy and the future of the AI chip market

Despite trade barriers, Nvidia’s leadership has remained optimistic. CEO Jensen Huang recently stated that while the company expects minimal short-term impact from the restrictions, it is considering shifting more production to the United States in the long run.

The massive investment in H20 chips underscores China’s determination to sustain AI innovation despite external pressures. As the US tightens control over semiconductor exports, China is simultaneously ramping up efforts to build a self-sufficient chip ecosystem, a move that could reshape the global semiconductor supply chain in the years ahead.