 "How DeepSeek’s AI models gave NVIDIA's H20 chips a major boost in China, sent demand rocketing")
China’s appetite for NVIDIA’s H20 AI chips has skyrocketed, thanks to the rapid adoption of DeepSeek’s low-cost AI models. Major tech firms, including Tencent, Alibaba, and ByteDance, have significantly increased their orders for the China-specific H20 processor, designed in response to US export restrictions. The sudden surge highlights NVIDIA’s continued dominance in the AI hardware market, even as concerns grow over potential new restrictions from the US government.
DeepSeek’s rise has also opened the AI space to a broader range of industries. Previously, only financial and telecom firms could afford AI computing servers, but now businesses in healthcare, education, and beyond are integrating AI into their operations. This shift has created fresh demand for AI chips, countering fears that DeepSeek’s efficiency might reduce the need for high-powered processors.
Optimising performance, increasing demand
DeepSeek’s large language models (LLMs) have been making waves for their ability to rival Western AI models while being significantly more cost-efficient. Unlike traditional AI models that require immense raw computing power, DeepSeek’s systems focus on inference-based computing, which prioritises efficiency in generating responses rather than brute-force data processing.
Despite initial concerns that this approach might curb demand for AI computing power, it has had the opposite effect. More companies are now able to deploy AI-driven applications, leading to greater demand for AI chips to power these systems. NVIDIA’s H20, despite being a scaled-down version of its high-end AI chips, has become the go-to processor in China for these applications.
NVIDIA remains the clear AI leader
Even as Chinese chipmakers like Huawei continue to develop their own AI processors, NVIDIA’s H20 remains the industry standard. Analysts estimate that over 1 million H20 chips were shipped in 2024, generating $12 billion in revenue for NVIDIA. The company’s continued stronghold in the Chinese AI market suggests that, despite trade restrictions, its technology remains unmatched for now.
While US authorities have banned exports of NVIDIA’s most advanced AI chips to China since 2022, the H20 was specifically developed to comply with export regulations. This has allowed NVIDIA to maintain a foothold in the Chinese market, even as Washington considers tightening restrictions further.
Chinese companies rushing to integrate DeepSeek AI
DeepSeek’s rapid rise has sparked widespread adoption across China. Tencent is beta-testing the AI models within WeChat, the country’s most popular messaging app, while Great Wall Motor has incorporated DeepSeek’s AI into its smart vehicle systems. Other major companies are also exploring AI integration, further cementing the demand for high-performance AI chips like the H20.
The US government’s potential new restrictions on AI chip exports could disrupt NVIDIA’s supply to China, but for now, DeepSeek’s momentum is proving to be a significant growth driver for NVIDIA in the region. As AI continues to expand into new industries and everyday applications, the need for powerful inference-based computing is only expected to rise — and NVIDIA is at the centre of it all.
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