TrendForce: China Expected to Boost Procurement Ratio for Foreign AI Chips to 49% - EE Times Asia | Goose Pod

Authors: Stephen Las Marias

Publisher:

EETimes Asia

Published: 7/31/2025

Language:English

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Aura Windfall

Good evening 跑了松鼠好嘛, and welcome to Goose Pod, a special podcast just for you. I'm Aura Windfall. Today is Monday, August 4th, and we're exploring a fascinating shift in the world of AI.

Mask

And I'm Mask. The topic is TrendForce's latest report: China is expected to dramatically boost its procurement of foreign AI chips. This isn't just a market trend; it's a strategic pivot with massive implications.

Aura Windfall

Let's get started. The central piece of news is that the U.S. government is lifting export restrictions on NVIDIA's H20 GPU, a chip designed specifically for the Chinese market. It’s a huge reversal, and the ripple effects are already being predicted, aren't they?

Mask

It's not a reversal, it's a calculated adjustment. TrendForce predicts China's procurement of foreign AI chips, mainly from NVIDIA and AMD, will now jump to 49%, up from a previous projection of 42%. This is about NVIDIA reclaiming its turf after being sidelined.

Aura Windfall

And what I know for sure is that when there's this kind of pent-up demand, the floodgates opening can be truly transformative. Chinese Cloud Service Providers, or CSPs, are expected to aggressively adopt the H20 to build out their data centers. It’s a powerful moment of reconnection.

Mask

It's a moment of pragmatism. China’s homegrown chips, like those from Huawei, simply don't have the mature ecosystem to compete with NVIDIA's system integration and supply chain scale. They need the H20 to stay in the game, and NVIDIA needs the revenue. It's a temporary truce, not a friendship.

Aura Windfall

But this also breathes new life into other parts of the supply chain, right? The report mentions that the renewed availability of the H20 is expected to drive up demand for High Bandwidth Memory, or HBM. It shows how interconnected this entire technological ecosystem truly is.

Mask

Exactly. The H20 chips in 2024 use HBM3, and they're set to upgrade to HBM3e in early 2025. Meanwhile, China's domestic chips are stuck on older HBM2e because of export restrictions on HBM itself. The H20 isn't just a better chip; it's a gateway to better components.

Aura Windfall

So, while there's this undercurrent of geopolitical risk, the immediate future seems to be one of aggressive stockpiling and development. It feels like both sides are preparing for the next chapter, whatever that may be, by building up their strength now. A truly fascinating dynamic.

Aura Windfall

To truly understand this moment, we have to look back. This whole situation didn't just appear out of nowhere. What I find so compelling is how this story has been unfolding for years, a true saga of policy, innovation, and restriction. It's a journey of purpose and power.

Mask

It started in October 2022. The Biden administration fired the first major shot with restrictions on chip exports to China. They weren't just targeting chips; they were targeting the semiconductor manufacturing equipment itself. The goal was clear: cripple China's ability to produce advanced AI hardware. They tightened the screws again in 2023 and 2024.

Aura Windfall

And in the middle of this, we see these incredible moments of human ingenuity. Look at Huawei. Despite the restrictions, in 2023 they released the Mate 60 Pro smartphone with a 7-nanometer processor made domestically by SMIC. It was a testament to the power of a focused mission.

Mask

It was a significant achievement, but let's be realistic. That chip was a generation or two behind what Taiwan could produce. SMIC was making these without the most advanced EUV machines, which is impressive but not scalable. Their output is in the low tens of thousands of wafers monthly, not the hundreds of thousands needed for global dominance.

Aura Windfall

But isn't that the point? It's not always about having the absolute best tool, but about how creatively you use the tools you have. Chinese firms like DeepSeek showed this by developing optimization techniques to work around hardware limits, essentially reprogramming chips at a lower level to make them more efficient.

Mask

That's a clever workaround, a temporary fix. It highlights the core debate: are these controls effectively kneecapping China's short-term advancement, or are they just forcing China to become fully independent in the long term? As Dylan Patel said, 'China will win because of these restrictions long-term, unless AI does something in the short-term.' It's a high-stakes gamble.

Aura Windfall

It’s a powerful question of strategy and spirit. The U.S. employed this ‘small yard and high fence’ strategy, trying to contain China’s AI capabilities. But what we’re seeing is that when you build a fence, you also challenge people to find a way over it, or to build something even stronger within their own yard.

Mask

And China’s response has been a full-court press for self-sufficiency. Huawei is at the center, pushing to develop everything from GPUs to the manufacturing tools themselves. They're reportedly working on techniques to get to 3-nanometer class nodes with older DUV tools, a massive technical challenge. It’s a brute-force approach born of necessity.

Aura Windfall

And what I know for sure is that this external pressure has forged a powerful sense of purpose within China's tech industry. As one industry leader there said, these controls will compel them to innovate their paths 'seven to eight years ahead of the global semiconductor industry.' That’s a bold vision.

Aura Windfall

This brings us to the heart of the conflict. It's not just about chips; it's about competing philosophies. The U.S. frames this as a "race" for AI dominance, necessary for national security. But is that the right way to look at it? Is it a race we can truly control?

Mask

The 'race' framing is a justification for aggressive policy. The reality is, you can't put the genie back in the bottle. China has four times the STEM graduates we do and massive state resources. The idea that we can permanently hold them back is naive. They will develop AI in parallel to us.

Aura Windfall

Exactly! One expert put it beautifully: 'U.S. policymakers must quickly gain comfort with the fact that America and China are going to be navigating the frontiers of AI side-by-side.' This suggests the focus should shift from weakening China to strengthening America. A powerful truth.

Mask

The conflict is also playing out in the market. You have NVIDIA's H20, the sanctioned-but-now-available foreign chip, versus Huawei's Ascend 910B. Reports say Huawei's chip achieves a significant portion of NVIDIA's performance at a lower cost. But NVIDIA offers a mature, easy-to-use ecosystem. It's a classic battle of performance-per-dollar versus turnkey reliability.

Aura Windfall

And this creates such a complex dilemma for Chinese companies. Do they choose the immediate power and ease of NVIDIA, or do they invest in the long-term strategic goal of supporting a domestic champion like Huawei, even if it means more friction today? It's a decision about both business and national purpose.

Mask

And the U.S. is undermining its own position. While we focus on blocking China, funding for crucial research at places like the National Science Foundation has shrunk. We're restricting visas for the very talent we need to attract. It's like trying to win a marathon by tripping your opponent while refusing to train yourself. It's a losing strategy.

Aura Windfall

Let’s talk about the immediate impact of this H20 decision. What I find so hopeful is that it’s not just about one company. The renewed shipments are expected to significantly boost demand for High Bandwidth Memory, or HBM. It’s a rising tide that lifts multiple boats in the supply chain.

Mask

It's a direct economic consequence. The H20 uses advanced HBM3, and soon HBM3e. Chinese alternatives are stuck on older HBM2e due to separate restrictions. So, every H20 sold doesn't just benefit NVIDIA; it benefits HBM manufacturers like SK Hynix and Samsung. It props up the entire high-end memory market.

Aura Windfall

And for the major Chinese Cloud Service Providers, this is a moment to finally exhale and build. For months, their AI infrastructure plans have been in limbo. Now, they're expected to prioritize the H20 and aggressively build out their data centers. This will have a huge impact on their ability to offer AI services.

Mask

It’s a massive capital expenditure wave waiting to happen. These CSPs have pent-up demand and now they have access to the primary high-end tool. This will unlock a new phase of AI deployment in China, from large language models to enterprise AI. But it also increases their dependency on NVIDIA, a foreign supplier. It’s a double-edged sword.

Aura Windfall

That’s a powerful point. While it solves an immediate problem, it also deepens the entanglement. The broader societal implication is that despite political tensions, the technological and economic ecosystems are still profoundly interconnected. You can't just unplug one without affecting the other, a truth that this decision makes very clear.

Aura Windfall

So, where do we go from here? What I know for sure is that the future isn't about one nation winning, but about how the world navigates this new era of AI together. The U.S. strategy might need to evolve from simple restriction to fostering its own strengths.

Mask

The future is a two-track race. China will accelerate its drive for self-reliance, spurred on by this period of restriction. The U.S. must focus on its own private sector, funding research and attracting talent. The idea of a decisive, permanent technological lead is a fantasy. We will be developing AI side-by-side.

Aura Windfall

And perhaps there’s a shared purpose in that. Both nations, and the world, face risks from rogue actors who might exploit AI without restraint. There's a potential for cooperation on safety and security, even amidst competition. It’s about finding that common ground, that shared human truth.

Aura Windfall

And that's all the time we have for today. The key takeaway is that the world of AI is more complex than a simple race; it's an interconnected dance of competition and dependency. Thank you for listening to Goose Pod.

Mask

This is a temporary state. The long-term strategic goals haven't changed. That's the end of today's discussion. See you tomorrow.

## TrendForce: China Expected to Boost Procurement Ratio for Foreign AI Chips to 49% **Report Provider:** TrendForce **Author:** Stephen Las Marias **Publication Date:** July 31, 2025 **Source:** EE Times Asia **Topic:** Technology (AI, Robotics) ### Key Findings and Conclusions: TrendForce anticipates a significant increase in China's procurement of foreign AI chips, primarily from NVIDIA and AMD, following the U.S. government's lifting of export restrictions on NVIDIA's H20 GPU. This renewed availability is expected to drive demand recovery from local AI and Cloud Service Providers (CSPs). * **Increased Procurement Ratio:** China's procurement ratio for foreign AI chips is projected to rise to **49%**, an increase from the previously estimated **42%**. * **H20 as Primary High-End AI Chip:** The H20 GPU, specifically developed for the Chinese market, is poised to regain its position as the primary high-end AI chip. * **Boost in HBM Demand:** The renewed availability of the H20 is also expected to drive up demand for High Bandwidth Memory (HBM). * **Pent-up Demand:** The resumption of H20 shipments is anticipated to unlock significant pent-up demand for AI infrastructure deployment in China, particularly among major CSPs prioritizing H20 for their data centers. * **NVIDIA's Custom Offerings:** NVIDIA will also launch a custom version of the RTX PRO 6000 for the Chinese market to support a broader range of edge AI inference applications. * **HBM Dependency:** China's domestic ASIC makers face export restrictions on HBM, with many products still relying on older HBM2e. This makes the H20, which will primarily use HBM3 8hi and upgrade to HBM3e 8hi in early 2025, a more favorable option, contributing to a higher share of total HBM consumption. ### Key Statistics and Metrics: * **China's AI Chip Procurement Ratio:** Projected to increase to **49%** (up from 42%). * **H20 Chip Memory:** Primarily uses **HBM3 8hi**, with an upgrade to **HBM3e 8hi** and increased total capacity expected in early 2025. ### Important Recommendations: While the report doesn't explicitly state recommendations, it implies that **CSPs and OEMs in China are expected to stockpile aggressively** if the H20 export ban is lifted. ### Significant Trends or Changes: * **Easing of U.S. Export Restrictions:** The U.S. government's lifting of export restrictions on NVIDIA's H20 GPU to China is the primary catalyst for these changes. * **Resumption of H20 Shipments:** This marks a significant shift after tightened restrictions in April led to downward revisions of annual H20 shipments. * **Continued Domestic Development:** Despite the renewed availability of foreign chips, Chinese companies like Huawei will continue to accelerate their development of in-house AI chips and ecosystems. ### Notable Risks or Concerns: * **Geopolitical Uncertainty:** China's AI market remains vulnerable to geopolitical uncertainty. * **Persistent Risks for NVIDIA:** Risks to NVIDIA's operations in China persist. ### Material Financial Data: No specific financial data or figures were provided in this article. ### Contextual Interpretation: The article highlights a dynamic shift in the global AI chip market, particularly concerning China's access to advanced technology. The U.S. government's decision to ease export restrictions on NVIDIA's H20 GPU is a critical development. The H20 is a specialized chip designed to comply with U.S. regulations while still offering significant AI processing capabilities. Its renewed availability is expected to be a major boon for China's AI sector, which has been constrained by previous restrictions. The increase in China's procurement ratio for foreign AI chips from 42% to 49% signifies a substantial reliance on international suppliers for high-end AI hardware. This is further underscored by the fact that even with domestic efforts from companies like Huawei, their AI chip ecosystems are not yet mature enough to fully compete with NVIDIA's established advantages in system integration, computational efficiency, and supply chain scale. The mention of HBM (High Bandwidth Memory) is also crucial. HBM is a critical component for high-performance AI processors, providing faster data access. The H20's reliance on HBM3 and the planned upgrade to HBM3e indicate that China's demand for these advanced memory solutions will also increase. The fact that domestic Chinese ASIC makers are facing export restrictions on HBM further solidifies the H20's competitive edge in the Chinese market. The article concludes by acknowledging the ongoing geopolitical tensions and the potential for future risks, suggesting that while there's a current easing of restrictions, the situation remains fluid. This implies a strategic approach from both China (stockpiling) and domestic players (accelerated development) to navigate these uncertainties.

TrendForce: China Expected to Boost Procurement Ratio for Foreign AI Chips to 49% - EE Times Asia

Read original at EETimes Asia →

Article By : TrendForce Category : AI 2025-07-31 (0) CommentsAsk question of embeddedThe renewed availability of H20 is also anticipated to drive up demand for HBM.The U.S. government’s lifting of exports restrictions on NVIDIA’s H20 GPU to China is expected to boost demand recovery from local AI and CSPs, with the H20 poised to once again become the primary high-end AI chip in the market, according to TrendForce.

The renewed availability of H20 is also anticipated to drive up demand for HBM.Following the tightened U.S. restrictions on high-end AI chip exports in April, annual shipments of the H20—developed specifically for the Chinese market—were sharply revised downward. Based on recent developments and the possibility that NVIDIA will push to meet its original shipment targets, TrendForce has raised its estimate of China’s procurement ratio for foreign AI chips (mainly from NVIDIA and AMD) to 49%, up from previously projected 42%.

Although companies like Huawei are developing in-house AI chips, their ecosystems are not yet mature enough to fully replace NVIDIA’s advantages in system-level integration, computational efficiency, and supply chain scale. The resumption of H20 shipments is expected to unlock significant pent-up demand for AI infrastructure deployment in China, especially among major CSPs, who are likely to prioritize H20 for building out their own data centers.

Additionally, NVIDIA is set to launch a custom version of the RTX PRO 6000 for the Chinese market to support a broader range of edge AI inference applications.The H20 chips shipped in 2024 primarily use HBM3 8hi, with an upgrade to HBM3e 8hi and increased total capacity expected in early 2025. As China’s domestic ASIC makers face export restrictions on HBM, many of their products still rely on previously sourced HBM2e.

As a result, the H20 is likely to gain favor, contributing to a higher share of total HBM consumption.TrendForce notes that China’s AI market remains vulnerable to geopolitical uncertainty, and risks to NVIDIA persist. If the H20 export ban is indeed lifted, local CSPs and OEMs are expected to stockpile aggressively, while domestic AI chipmakers and ecosystem players—backed by government support—will continue to accelerate their development in parallel.

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