The Tamesis
People familiar with the matter told Reuters that Chinese authorities have severely restricted the country’s technology companies from purchasing Nvidia’s second-best artificial intelligence chip, the H200.
Sources said officials convened a meeting of domestic technology companies on Tuesday and explicitly instructed them not to buy chips unless necessary.
Authorities also told customs officers this week that Nvidia’s H200 artificial intelligence chips would not be allowed into China, people familiar with the matter said.
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“Officials have been very harsh in their words and it’s basically a ban at the moment, but that could change in the future if things change,” a person familiar with the matter said.
Sources said the authorities did not provide any reasons for their order or say whether it amounted to a formal ban or a temporary measure.
Chinese technology companies have ordered more than 2 million H200 chips, priced at about $27,000 each, far exceeding Nvidia’s inventory of 700,000 chips.
However, despite such demands, it is unclear whether Beijing wants an outright ban on H200 chips so that domestic chip companies can thrive, or is still considering restrictions, or whether the measures could be used as a bargaining tactic in negotiations with Washington.
information report On Tuesday, the Chinese government told some technology companies this week that it would only approve H200 purchases under special circumstances, such as collaboration with universities for research and development.
One of the sources said exemptions were being discussed for research and development purposes and universities.
‘Leverage’ ahead of Trump’s visit
H200 is one of the biggest flashpoints in current Sino-US relations.
The chip, which this week received formal approval from the Trump administration for export to China under certain conditions, is also a hot-button issue in the United States, with many China hawks concerned that the chip could bolster China’s military power and undermine U.S. advantages in artificial intelligence.
Analysts say Beijing’s restrictions on H200 may be an attempt to exert leverage over Washington ahead of U.S. President Donald Trump’s visit to China in April to meet Xi Jinping, with both sides reaching an uneasy truce on trade.
Reva Goujon, a geopolitical strategist at research firm Rhodium Group, said: “Beijing is … trying to find greater concessions to unwind U.S.-led control of technology.”
In order to curb the development of China’s artificial intelligence and technology, the United States will impose restrictions on China’s high-end chip exports starting in 2022.
Last year, Trump first banned and then allowed exports of a weaker H20 chip. But Beijing effectively blocked those sales starting around August, prompting Nvidia CEO Jensen Huang to say the company’s share of the artificial intelligence chip market in the world’s second-largest economy had shrunk to zero.
However, the H200’s performance is roughly six times that of the H20, making it a very attractive proposition.
Tradeoffs in the Tech War
While Chinese chipmakers have developed AI processors such as the Huawei Ascend 910C, the H200 is considered to be much more efficient for large-scale training of advanced AI models.
However, there is still controversy over which party can gain more benefits from selling H200 chips to China.
Re-entering the Chinese market means huge profits for Nvidia and the US government, which will charge 25% of chip sales.
White House AI czar David Sacks and others also believe exporting such chips to China would hinder Chinese rivals from redoubling their efforts to catch up with Nvidia’s most advanced chip designs.
“(Beijing) believes the United States is eager to sell AI chips to China and therefore believes China has the ability to extract concessions from the United States in exchange for licensing approvals,” said Chris McGuire, senior fellow for China and emerging technologies at the Council on Foreign Relations think tank.
- Vishakha Saxena Additional Editor, Reuters
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