China approved purchases of Nvidia’s popular H200 artificial intelligence chip for the first time, granting authorizations to several of Nvidia’s Chinese customers, people familiar with the matter said on Wednesday.
The expected decision took place during a visit to China by Jensen Huang, executive director of the American chip giant. The Trump administration said late last year that Nvidia could sell the AI chip to Chinese companies, but it was uncertain whether Beijing would allow the sales to go through.
The first approval covers several hundred thousand H200 chips, which would be worth around $10 billion, the people said. Major technology companies including Alibaba and ByteDance have received the initial batch of approvals, and authorities are expected to approve more imports in the coming weeks, they said.
Opportunity with security!
Beijing’s decision is another sign of its recent rapprochement with Washington on some issues ahead of a visit by US President Donald Trump to China, scheduled for April. The two superpowers reached a trade truce in October.
Companies wanting to buy American chips have recently submitted documents to Chinese authorities to explain how they plan to use them. Chinese officials have told companies that any purchases must be for uses deemed necessary, such as advanced AI research and development, reported the The Wall Street Journal.
Some companies have also discussed with officials their plans to acquire domestic chips, the people said. Authorities required companies to use domestic chips for some AI training tasks and for most AI workloads involving inference — when AI uses its training to produce results, such as a chatbot’s responses.
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Beijing wants to help the country’s best AI developers create new models and applications quickly, and Nvidia’s chips would advance that goal. On the other hand, Beijing has been working for years to cultivate a self-sufficient semiconductor industry. This has met with resistance, especially from private sector technology companies that are accustomed to using Nvidia’s products and software tools. Chinese chipmakers have also failed to match the best chips produced in the US.
The latest policy reflects these competing goals: Beijing is allowing some imports of Nvidia’s AI chips while imposing limits to encourage Chinese companies to buy local chips.
Huang, the CEO of Nvidia, regularly visits China at this time of year, ahead of Lunar New Year celebrations, to meet with local officials and business partners.
Since Friday the 23rd, Huang has visited Shanghai, Beijing and Shenzhen, three Chinese cities where Nvidia has offices. He was seen visiting a food market and handing out kumquats – a citrus fruit that represents prosperity in Chinese culture – to local employees at a company party.
However, he did not meet senior Chinese officials, according to people familiar with his trip. Last year, Huang visited China at least three times and met with Vice Premier He Lifeng.
Sales of the H200 mark the breaking of an impasse that began last April, when the US initially banned sales to China of H20 chips, a less powerful version of the H200 that Nvidia had developed for the Chinese market. Washington later reversed the decision on the H20 chips, but Beijing then intervened and told companies not to buy them, citing cybersecurity issues, which Nvidia said did not exist.
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Following an October meeting between Trump and Chinese leader Xi Jinping in South Korea, Washington cleared the way for the H200, which is more powerful than any of the chips Nvidia had previously been allowed to sell in China. The US government has required Nvidia to secure a sufficient supply of AI chips in the US, and its customers must demonstrate adequate security procedures before the chips are shipped.
Huang said in October that the company’s share of the Chinese market for graphics processing units used for AI had fallen to zero from 95% as he waited for action from the two governments.
Chinese competitors rushed to fill the gap. Companies are using technologies such as combining a large number of less powerful chips to increase computing power. AI developers have managed to create decent AI models on domestic chips, driving recent rallies in Chinese semiconductor and AI stocks.
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However, some AI researchers are more pessimistic and have warned that limited access to chips, including those from Nvidia, could widen the AI gap between China and the US.
Huang plans to travel later to Taiwan, a stop that is also part of his annual routine, where he hopes to talk to suppliers about manufacturing more H200 chips to meet Chinese demand, people familiar with his trip said.
