Nvidia faces supply pressure as Chinese tech giants order $35B in workstation GPUs

Major Chinese technology firms, including ByteDance, Alibaba, and Tencent, have placed orders for over three million Nvidia RTX PRO 5500 graphics cards, totaling more than $35 billion at list price. These professional workstation cards are designed to comply with United States export restrictions, making them a viable alternative for AI inference tasks in China where top-tier data center chips are restricted.

The massive demand is expected to create a significant supply crunch. While Chinese orders may exceed six million units, Nvidia’s global production for the RTX PRO 5500 is estimated to be limited to approximately three million cards in 2027. Consequently, Nvidia may only be able to fulfill 5% to 10% of the total volume requested by its partners.

Separately, Nvidia CEO Jensen Huang noted at GTC Berlin that the functional lifespan of GPUs is extending to eight years or more due to software optimizations and the programmable nature of the hardware. This shift suggests that AI hardware may maintain high economic value for longer periods than previously estimated, as older chips can be repurposed for different computing tasks.