NVIDIA has reportedly halted production of its China-focused H200 "Hopper" GPU at TSMC's facilities, according to multiple reports. The company has built up an inventory of 250,000 H200 GPUs, which will be available in the Chinese market for select applications that do not compromise United States national security. After NVIDIA was granted export rights to China for its H200 accelerators, the company began stockpiling these GPUs to supply AI labs across China. However, China has also restricted what its domestic companies and AI labs can import, meaning that the import of H200 GPUs is still prohibited unless a company receives a letter of exemption from Beijing. This has resulted in NVIDIA using its TSMC N5 5 nm node capacity to create about 250,000 units, which are now stored in a warehouse awaiting export approval from the U.S. administration and import approval from Chinese customs for AI labs.

Interestingly, the Financial Times and Reuters note that NVIDIA will now "reallocate" capacity from H200 production to the new "Rubin." However, these two GPU generations do not use the same manufacturing node or packaging technology. For "Hopper," NVIDIA uses TSMC's 5 nm node with CoWoS-S packaging, while "Rubin" uses a 3 nm node with CoWoS-L packaging. These reports likely refer to some conversion of manufacturing capacity involving either the node or packaging capacity that NVIDIA has secured. It is unlikely that the 5 nm semiconductor node can be converted into a 3 nm node without significant line remodeling and changes to manufacturing equipment. However, packaging can be adjusted more easily, which is likely what these reports are indicating.Finally, NVIDIA's production capacity at TSMC's facilities is secured for a certain number of wafers on a specific node for a set number of months. This means that the H200 production target has been met, and NVIDIA has not extended that number. Instead, TSMC will refurbish some of the packaging capacity (or less likely, node production) to create a new type of packaging needed for the upcoming "Vera Rubin" VR200 systems. As NVIDIA is now TSMC's biggest customer, it has the right to choose and dictate production capacity within the firm, as well as request modifications that TSMC is more than happy to accommodate.