Nvidia $NVDA ( ▲ 3.74% ) moved higher in premarket trading after Reuters reported that the company has told customers in China it may increase production of its H200 chips to meet unexpectedly strong demand. Two sources briefed on the situation said Nvidia is considering adding new capacity and is “leaning toward” expanding output.
Reuters previously reported that Alibaba and ByteDance are eager to buy H200 chips. Those processors were banned from being sold into China until this week, when President Donald Trump lifted export restrictions in exchange for the U.S. government receiving 25 percent of revenue from each sale. Nvidia shares initially rallied on the news, though gains were trimmed after the Financial Times reported that Beijing may allow only limited access to the H200.
If Nvidia does boost H200 production, it will face heavy competition for memory and packaging. The company is already battling industry wide supply constraints, and its newest flagship platform, Blackwell, is also competing for the same manufacturing resources.
The H200 is the highest end chip in Nvidia’s Hopper generation and is significantly more powerful than any domestically produced alternative available to Chinese buyers. It also outclasses the H20, a scaled back Hopper chip originally designed for China but repeatedly caught in shifting export rules. Even after restrictions were lifted, Beijing urged major tech firms to avoid buying the H20 in favor of local processors, and large orders never came through, according to Nvidia CFO Colette Kress.