Nvidia is evaluating the addition of new production capacity for its H200 AI chip after Chinese orders surpassed current output, following a U.S. government decision that permits the company to export H200 processors to China with a 25% fee on each sale.
The H200, Nvidia’s second‑fastest AI chip, is the most powerful chip legally available to Chinese firms. Demand from major Chinese companies such as Alibaba and ByteDance has already outpaced the company’s limited production volume, prompting the evaluation of capacity expansion.
The U.S. decision, announced on December 9, 2025, allows Nvidia to sell H200 chips to China but requires the company to remit a 25% fee on each sale, a measure aimed at balancing revenue opportunities with national‑security concerns.
Nvidia’s management has highlighted the strong demand for its AI platform. CEO Jensen Huang noted in the Q3 FY2026 earnings call that “Blackwell sales are off the charts” and that the company is “in a virtuous cycle of AI” driven by cloud and training workloads.
Expanding H200 capacity would enable Nvidia to capture a larger share of the Chinese market, potentially boosting revenue from the H200 line, while the fee structure will reduce net revenue per unit but still leave a sizable margin due to the chip’s high price point.
Nvidia’s recent earnings show a 62% year‑over‑year revenue increase to $57.0 billion and GAAP EPS of $1.30, driven by strong data‑center demand. The company’s ability to scale AI hardware has been a key factor in its consistent earnings beats.
Analysts view the expansion as a strategic move to solidify Nvidia’s leadership in high‑performance AI chips, but they also note the geopolitical headwinds and the uncertainty surrounding China’s final approval of the imports.
If China approves the imports, Nvidia could see a significant uptick in H200 sales, but the 25% fee and potential bundling requirements could temper the revenue upside.
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