TLDR
- Beijing approved ByteDance, Alibaba, and Tencent to purchase 400,000+ Nvidia H200 chips combined
- Licenses were granted while Nvidia CEO Jensen Huang visited China this week
- Sources say conditions on approvals are too restrictive and orders aren’t being placed yet
- Over 2 million H200 chips were previously ordered by Chinese firms, exceeding Nvidia’s stock
- More companies are queued for future approvals with unclear criteria
China changed direction on Nvidia’s powerful AI chips. Beijing approved three tech giants to import H200 processors this week.
ByteDance, Alibaba, and Tencent got the green light to purchase over 400,000 H200 chips total. Four sources with direct knowledge told Reuters about the decision.
The approvals landed during Nvidia CEO Jensen Huang’s China trip. One source confirmed the regulatory clearance came while he was visiting this week.
This flips the script from earlier in January. Chinese customs authorities had instructed agents that H200 chips couldn’t enter the country.
License Terms Slow Down Orders
Beijing added requirements to each approval. Sources say those conditions are still being worked out between the government and companies.
Here’s the catch. One source described the licenses as overly restrictive. Companies have approvals but aren’t placing actual orders yet.
The H200 ranks as Nvidia’s second strongest AI chip. It delivers roughly six times the power of the H20 chip, which was the most advanced chip Nvidia could previously sell to China.
Domestic Chinese manufacturers like Huawei have matched the H20’s capabilities. The H200 remains out of reach for Chinese chipmakers.
Mountains of Unfilled Demand
Additional companies are waiting in line for the next approval wave. Beijing hasn’t disclosed what criteria determines who gets approved. The number of approvals in future rounds is unknown.
Chinese tech firms ordered more than 2 million H200 chips last month. Nvidia’s current inventory can’t fulfill even a fraction of that demand.
Washington gave Nvidia the okay to export H200 chips to China in early January. Chinese authorities maintain final approval authority over imports.
Beijing is juggling competing priorities. The government wants to satisfy massive domestic appetite for top-tier AI chips. It’s also committed to developing China’s semiconductor industry.
Chinese officials told tech companies in previous meetings to purchase chips only when necessary. One proposal would mandate buyers purchase a certain ratio of domestic chips with each H200 order.
AI Arms Race Heats Up
The approvals reveal Beijing’s focus on its largest internet companies. These firms are investing billions in data center infrastructure for AI development. They’re working to match American rivals including OpenAI.
The H200 turned into a friction point in U.S.-China technology relations. Chinese companies demanded the chips. The U.S. approved exports. Beijing’s hesitation to allow imports created the bottleneck.
Huang landed in Shanghai last Friday for yearly celebrations with Nvidia’s China staff. He’s traveled to Beijing and other Chinese cities since arriving.
More firms are now queued for subsequent approval rounds. What Beijing considers when evaluating applications hasn’t been revealed. How many companies will receive clearance next remains uncertain.
