Chinese companies are ramping up orders for Nvidia's H20 artificial intelligence chip due to booming demand for DeepSeek's low-cost AI models, six people familiar with the matter said. The surge in orders,

DeepSeek’s R1 model uses inference to generate output without needing high-power chips, making Chinese-produced chips a a viable option.

The focus of AI is pivoting from training to inference, according to TechInsights. As AI companies like DeepSeek-R1 highlight the growing need for inference computational power, Nvidia's market dominance remains strong,

The H20 remains the primary chip Nvidia (NASDAQ: NVDA) is allowed to sell in China following tightened regulations in late 2023. Analysts estimate Nvidia shipped around 1 million H20 units in 2024, generating over $12 billion in revenue, the report said.

Chinese companies are ramping up orders for Nvidia's H20 artificial intelligence chip due to booming demand for DeepSeek's low-cost AI models, six people familiar with the matter said.

Chinese AI chip manufacturers have announced support for or launched services based on the DeepSeek model. This development raises questions about the impact on the Chinese market and the evolving competition between Nvidia and local AI chip manufacturers.

DeepSeek majorly impacted Nvidia last month: its market cap dropped by $600B in one day. The chip giant will respond on this week's investors' call."

Demand for Nvidia's pricey artificial intelligence chips will be in focus when the company reports results on Wednesday as investors doubt the hefty spending on the technology after low-cost AI models from China's DeepSeek rattled the industry.