TLDR
- China authorized ByteDance, Alibaba, and Tencent to buy a combined 400,000+ Nvidia H200 chips
- The licenses were issued during Nvidia CEO Jensen Huang’s China visit this week
- Beijing attached conditions to the approvals that one source called too restrictive
- Chinese tech companies had ordered over 2 million H200 chips, exceeding Nvidia’s inventory
- Additional firms are waiting for approval in subsequent batches
China just made a major policy shift on Nvidia’s most advanced AI chips. Beijing gave three tech powerhouses permission to import H200 processors.
ByteDance, Alibaba, and Tencent received approval to buy more than 400,000 H200 chips together. Four people familiar with the matter shared the information with Reuters.
The timing is interesting. The approvals came while Nvidia CEO Jensen Huang was in China this week. One source said the regulatory clearance happened during his visit.
This represents a complete turnaround. Earlier this month, Chinese customs told agents that H200 chips weren’t allowed into the country.
The Fine Print Creates Problems
Beijing isn’t giving away free passes. Every approval comes with conditions attached, though sources say those requirements are still being hammered out.
One source raised red flags about the terms. They said the licenses are too restrictive. Companies aren’t converting their approvals into real purchase orders yet.
The H200 is Nvidia’s second most powerful AI chip. It performs about six times better than the H20 chip, which was previously the best chip Nvidia could sell to China.
Chinese companies like Huawei have caught up to the H20’s performance. They’re still way behind the H200.
Demand Far Exceeds Supply
More companies are lining up for future approval rounds. What Beijing is looking for in applicants isn’t clear. How many will get approved next is anyone’s guess.
Chinese tech firms placed orders for over 2 million H200 chips last month. Nvidia can’t come close to filling that demand with current inventory levels.
The U.S. cleared Nvidia to export H200 chips to China in early January. Chinese authorities hold the power to decide if those chips actually make it across the border.
Beijing faces a tough balancing act. The government needs to satisfy huge domestic demand for cutting-edge AI chips. It also wants to build up China’s own chip-making capabilities.
Chinese officials previously told tech companies to only purchase chips when truly needed. One proposal discussed would require buyers to purchase a set amount of domestic chips alongside each H200 order.
High Stakes for AI Race
The approvals show Beijing is prioritizing its biggest internet companies. These firms are spending billions building data centers for AI services. They’re trying to compete with American companies like OpenAI.
The H200 became a contentious issue in U.S.-China tech relations. Chinese firms wanted the chips desperately. Washington approved exports. Beijing’s reluctance to allow imports was the final obstacle.
Huang arrived in Shanghai last Friday for annual celebrations with Nvidia’s China employees. He’s visited Beijing and other cities since then.
Other firms are now in a queue waiting for subsequent approvals. The criteria Beijing uses to determine eligibility hasn’t been disclosed.
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