China’s three largest technology firms have received Beijing’s approval to purchase some H200 artificial intelligence chips from Nvidia, but the firms are still awaiting conditions for those purchases, people familiar with the matter told Reuters.
The H200 is Nvidia’s second-best AI chip and will be the best available processor for the technology in China, but Beijing has been restricting their purchases as part of a larger push to support domestic chipmakers.
But a green light to ByteDance, Alibaba and Tencent in favour of making some purchases marks a shift in that position as Beijing seeks to balance its AI needs against spurring domestic development.
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The three tech giants have been permitted to purchase more than 400,000 H200 chips in total, with other firms now joining a queue for subsequent approvals, the sources said.
The Chinese government is only granting approvals with conditions and the sources said they were still being decided upon. The licences were too restrictive and customers were not yet converting the approvals to purchase orders, they added.
The regulatory nods were granted during Nvidia chief executive Jensen Huang’s visit to China this week, one of the sources said. Huang arrived in Shanghai last Friday for routine annual celebrations with Nvidia’s China employees and has since travelled to Beijing and other cities, Reuters reported last week.
Still, it remains uncertain how many additional companies will receive approval in subsequent batches or what criteria Beijing is using to determine eligibility. Chinese technology firms have placed orders for more than two million H200 chips, far exceeding Nvidia’s available inventory.
Balancing ambitions
Chinese government officials have told domestic tech companies in previous meetings they should only purchase chips when necessary. Beijing’s hesitation to allow imports has been the main barrier to shipments.
It was unclear in recent weeks also whether Beijing would grant approval, as the government wants to balance meeting surging domestic demand for advanced AI chips and nurturing its domestic semiconductor industry.
Early this month, Chinese customs authorities told agents that the H200 chips were not permitted to enter China.
Beijing’s hesitation and delayed, unclear approvals are a result of China’s dual ambitions of beating the US in AI progress and, at the same time, developing a self-sufficient tech supply chain independent of foreign technology.
Chinese companies such as Huawei now have products that rival the performance of Nvidia’s H20 chip, which was previously the most advanced AI chip it was allowed to sell to China. But they still lag far behind the H200, which delivers roughly six times the performance of Nvidia’s H20 chip.
The approvals of the H200 suggest Beijing is prioritising the needs of major Chinese internet companies, which are spending billions of dollars to build data centres needed to develop AI services and compete with US rivals, such as OpenAI.
And yet, Beijing has also discussed requiring companies to bundle each H200 purchase with a set ratio of domestic chips, suggesting it remains aggressively committed to developing more capable homegrown AI chips.
- Reuters, with additional editing and inputs from Vishakha Saxena
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