China Approves Import of Nvidia's High-Performance AI Chips

China has approved the import of Nvidia's H200, one of its most powerful artificial intelligence (AI) chips. According to a Reuters report citing anonymous sources, ByteDance, Alibaba, and Tencent have received permission to purchase a total of over 400,000 H200 chips. This decision signals a shift in Beijing's stance, which for weeks had halted shipments despite U.S. export approval.

Strategic Approval and Technology Race

The approval came during a visit to China by Nvidia CEO Jensen Huang. H200 chips significantly accelerate the training process for large language models, reducing AI development costs. This situation makes high-performance AI chips a focal point in the technology race between Washington and Beijing. U.S. policymakers are caught between the desire to increase sales for American semiconductor companies and the fear that these exports could help China close the gap in its AI capabilities.

China is a major market for Nvidia. However, it is reported that Chinese authorities have added some conditions to the licenses that have not yet been finalized. One source stated that the license terms are very restrictive and that buyers have not yet converted the approvals into actual orders.

Balancing Competition with Domestic Industry

Experts evaluate Beijing's decision as a strategic move. The approval shows the priority of meeting the needs of major internet companies for AI services and data centers, on which they are spending billions to compete with U.S. rivals like OpenAI. However, China's efforts to develop its domestic semiconductor industry also continue.

Previous reports indicated that the Beijing administration discouraged domestic technology companies from purchasing foreign chips unless absolutely necessary. It was even reported that a proposal requiring each H200 purchase to be bundled with a certain proportion of domestic chip purchases had been discussed by authorities in the past. These developments bring to mind the industry's trend of cost-focused restructuring and shifting resources to artificial intelligence.

Technology Gap and Future Expectations

Nvidia's H200, its second most powerful AI chip after the B200, offers approximately six times the performance of the H20, the most capable chip Nvidia can sell to China. Although Chinese companies like Huawei have products competing with the H20, it is stated that these products lag behind the H200. Global demand for AI chips is driving equipment manufacturers like ASML to record levels, while companies are developing strategies to control costs and seize AI opportunities. Similarly, ASML's record profit announcement and decision to close job positions are among other examples of this transformation in the sector.

The first batch of H200 chips is expected to go to major technology companies with an urgent need for GPUs. However, access for state-backed firms, including telecom operators, is expected to remain tightly restricted. It is reported that other Chinese companies are waiting for the next round of approvals.