Chinese technology firms are lobbying Beijing to green light the sales of Nvidia’s H200 artificial intelligence chips in the country, and may be required to bundle up any purchases of the powerful semiconductors with domestically made chips.
Beijing has essentially banned its technology firms from buying the US chipmaker’s advanced processors, citing security fears.
It is also pushing to promote its own domestic AI chip industry. As domestic chip companies have yet to produce products that match the H200, there have been concerns that allowing the H200 into China could stymie the local industry.
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The H200 is easily the most powerful chip that Chinese chipmakers can access after US President Donald Trump allowed Nvidia this week to export the chip to its biggest tech rival.
The chip is about six times more powerful than the H20, a downgraded chip from Nvidia that was tailored specifically for the Chinese market and released in late 2023.
“Its (H200) compute performance is approximately 2-3 times that of the most advanced domestically produced accelerators,” said Nori Chiou, investment director at White Oak Capital Partners.
“I’m already observing many CSPs (Cloud Service Providers) and enterprise customers aggressively placing large orders and lobbying the government to relax restrictions on a conditional basis,” he said, adding Chinese AI demand exceeds the capacity of local production.
Uncertainties remain, however, as the Chinese government has yet to greenlight any purchase of the H200. Chinese officials convened emergency meetings on Wednesday to discuss the matter and has yet to decide whether to allow them to be shipped into China, the people said.
During the meetings, there was a proposal to require each H200 purchase to be bundled with a certain ratio of domestic chips, sources told Reuters.
Local Chips Still Key
The demand of the H200 from Chinese firms is so high that Nvidia is now considering adding more production line for the H200 AI chips, Reuters reported, citing people briefed on the matter. Orders for the powerful processors have exceeded Nvidia’s current output level, the people said.
Supply of H200 chips has been a major concern for Chinese clients and they have reached out to Nvidia seeking clarity on this, sources said.
Still, domestically made chips from the likes of Huawei and Cambricon will still be key to Chinese firms’ plans.
Market analysts told the South China Morning Post on Thursday that Beijing was unlikely to pushback against the H200 to allow it to continue making quicker progress on AI. But local chips will still remain in demand as they will be powerful enough to run inference — the process by which an AI model uses its existing data to make predictions or decisions on new data. The process requires significantly less computing power than AI training.
China has also made its priorities on domestic chips clear this week by adding domestic AI processors on an official procurement list for the first time. The Chinese industry ministry has added Huawei and Cambricon to its government-approved list of AI chip suppliers, the Financial Times reported this week, citing people familiar with the matter
The report noted that this was the first instance of a “written instruction” to government agencies and state-owned companies to support local chipmakers.
The move showed that Beijing was now confident that its domestic chips could had a reached a level of advancement that they could replace US-made alternatives, the FT said.
Backing from government policies and enterprise-level projects will lead China’s domestic AI chip market share reach 50% in 2026, according to TrendForce. Until last year, Nvidia dominated that market with a 95% share.
Huge demand
Major Chinese companies including Alibaba and ByteDance have already reached out to Nvidia this week about purchasing the H200 and are keen to place large orders. But very limited quantities of H200 chips are currently in production
H200 chips are Nvidia’s second-best line of AI chips currently. Its most advanced AI chip currently is the Blackwell and the upcoming Rubin lines and the company has prioritised their production instead of the H200.
Trump has previously said he will not allow the sales of both those chips to China in the interest of national security.
As part of the briefing provided by Nvidia, the company has also given them guidance on current supply levels, said one of the first two people, without providing a specific number.
The H200 went into mass deployment last year and is the fastest AI chip in Nvidia’s previous Hopper generation. The chip is manufactured by TSMC using the Taiwanese firm’s 4nm manufacturing process technology.
For Nvidia, adding new capacity is also challenging at a time when it is not only transitioning to Rubin but also competing with companies including Alphabet’s Google for limited advanced chipmaking capacity from TSMC.
- Reuters, with additional editing and inputs from Vishakha Saxena
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