Nvidia sees a surge in its H20 chip orders as Chinese firms rush to adopt DeepSeek AI models

Chinese companies are working up orders for Nvidia's H20 artificial intelligence chip due to the boom in demand for DeepSeek's low-cost AI models. The increase in orders underlines Nvidia's dominance of the market and could help alleviate concerns that DeepSeek might cause a slide in AI chip demand. 

Tencent, Alibaba and ByteDance have "significantly increased" orders of the H20, a chip specific to China due to US export controls, ever since the Chinese AI startup burst into the global public consciousness last month.

In addition to their internal needs for advanced AI chips, the three tech giants provide cloud computing services through which other firms can access and use AI tools. 

Previously only deep-pocketed financial and telecoms firms bought servers with AI computing systems. But now smaller companies in sectors like healthcare and education are also reportedly purchasing AI servers equipped with DeepSeek models and Nvidia H20 chips.

DeepSeek's large language models rival Western systems in performance at a fraction of the cost as they focus on "inference" or producing conclusions. That optimises computational efficiency rather than relying solely on raw processing power.

Nvidia's H20 chip remains the industry standard in China. Analysts estimate Nvidia shipped approximately 1 million H20 units in 2024, generating over $12 billion in revenue for the company.