Nvidia China Clients to Get 1% of $70 Billion RTX Chips Ordered

(Bloomberg) -- Chinese AI developers expect to receive just a small fraction of the advanced Nvidia Corp. ( NVDA ) chips they've ordered over the next several months, as the US company struggles to boost production to meet soaring demand.

Alibaba Group Holding Ltd., Tencent Holdings Ltd., ByteDance Ltd. and other Chinese AI and cloud firms have in total ordered about 6 million of Nvidia's RTX Pro 5500 chips, according to people familiar with the matter. Yet the companies predict they will get only some tens of thousands, or roughly 1%, within the next four months, said the people, asking not to be named discussing a private matter.

At more than $11,000 a chip, the total orders so far are valued at about $70 billion, the people said.

Chinese hyperscalers' strong appetite for the chips underscores the enormous shortage of AI computing power in the country. It also exposes the limitations of local hardware manufacturers despite the technological progress they've been making. Scant chip supply will make it harder for the Chinese AI developers to catch up with the US market leaders.

While the US bars Nvidia from selling its most cutting-edge chips to China, the RTX Pro 5500 isn't quite powerful enough to face such restrictions. Yet in China, it is among the best AI chips available, as local manufacturers Huawei Technologies Co. and Alibaba's T-Head trail the production and technological capabilities of their US rivals.

Nvidia, the global AI hardware leader, has lobbied the US government for years to be able to sell more chips to Chinese customers. Yet with insufficient global production capacity, the US company is prioritizing its most sophisticated and higher-margin semiconductors, used by the likes of OpenAI and Anthropic PBC.

Major Chinese AI developers expect the first batch of several thousand RTX Pro 5500 chips to be delivered by the end of this year, followed by another batch of tens of thousands around February, said the people. Those are the only confirmed shipments so far, one of the people said.

The Chinese hyperscalers estimate they could receive roughly 700,000 RTX Pro 5500 units by the end of 2027, as Nvidia is expected to ramp up production, said one of the people, citing internal calculations of a key buyer. The final shipment sizes could change, depending on Nvidia's capacity adjustments.