[K-tech] SK hynix could find opportunities as Nvidia faces supply bottleneck for China-bound AI chips

SK Hynix plant in Icheon Courtesy of Yonhap — SK hynix plant in Icheon, Gyeonggi Province/ Courtesy of Yonhap

SEOUL, July 23 (AJP) - Despite receiving a green light from Washington to apply for export licenses for its H20 artificial intelligence chip, Nvidia is grappling with production constraints that could sharply limit shipments to China.

The H20, a lower-spec AI chip tailored to comply with U.S. export controls, was expected to re-enter the Chinese market following a recent regulatory shift.

Chinese technology giants including ByteDance, Alibaba, and Tencent are eager to acquire the H20, which had been blocked from import under U.S. restrictions. With those curbs now partially relaxed, a backlog of pent-up demand remains. Yet Nvidia’s ability to meet that demand appears increasingly uncertain.

The chipmaker halted mass production of the H20 at TSMC during last year’s export ban. Since then, TSMC has reallocated the freed capacity to other clients. During a recent press conference in Beijing, Nvidia’s chief executive, Jensen Huang, said new production orders could take “at least nine months” before delivery.

Caught between bureaucratic ambiguity and mounting political scrutiny, Nvidia now faces a growing supply bottleneck that threatens to stall its return to the Chinese market.

One potential beneficiary of the logjam is South Korea’s SK hynix. The company began supplying its advanced 8-layer HBM3E (high-bandwidth memory) chips for use in the H20 earlier this year, replacing the previous-generation HBM3 to boost performance. Should Nvidia retain that configuration for China-bound shipments, SK hynix could be well-positioned to capitalize.

Although U.S.-based Micron is also qualified to supply HBM3E memory, analysts say SK hynix is likely to maintain its lead due to its longstanding partnership with Nvidia and demonstrated manufacturing yields.

The company has said it plans to devote 80 percent of its HBM3E output this year to 12-layer chips and the remaining 20 percent to 8-layer versions. That ratio, however, could be adjusted if demand for the H20 increases.

Lim Jaeho ajupresswogh@ajupress.com