US Clears Nvidia H200 Chip Sales to Chinese Firms

The United States has granted approval for approximately 10 Chinese firms to purchase Nvidia’s H200 AI chips, though no deliveries have been completed to date [2]. This development leaves a significant technology deal in limbo as Nvidia CEO Jensen Huang seeks a breakthrough during diplomatic discussions in Beijing [3].

Key takeaways

• The U.S. Commerce Department has authorized companies including Alibaba, Tencent, ByteDance, and JD.com to purchase H200 chips [2].
• Approved customers are permitted to buy up to 75,000 chips each under current licensing terms [2].
• Despite U.S. approval, sales have stalled as Chinese firms have pulled back following guidance from Beijing [2].
• A unique revenue-sharing arrangement requires 25% of chip sale proceeds to go to the U.S., necessitating that shipments pass through U.S. territory [2].

Regulatory Hurdles and Stalled Deliveries

The path to finalizing these sales is complicated by a complex set of requirements from both nations. U.S. regulations mandate that Chinese buyers demonstrate the installation of sufficient security procedures and provide assurances that the chips will not be utilized for military purposes [2]. Furthermore, the U.S. government has negotiated a structure where 25% of the revenue from these sales is directed to the United States, requiring the hardware to transit through U.S. territory to satisfy legal constraints [2].

While the U.S. has cleared the sales, Chinese firms have hesitated to proceed. Sources indicate that Beijing is exerting pressure to block or vet these orders, as the central government aims to prioritize investment in its own domestic AI industry [2]. This strategic pivot is reflected in the growing reliance of Chinese firms on domestic alternatives, such as those developed by Huawei [2]. Additionally, new supply chain security regulations issued by China’s State Council have intensified government efforts to reduce dependency on foreign critical technology [2].

Why it matters

The situation underscores the precarious position of Nvidia, which previously held approximately 95% of China’s advanced chip market before export controls were tightened [2]. CEO Jensen Huang has warned that these restrictions are eroding the company's foothold in the region, noting that its share of AI accelerators in China has effectively fallen to zero [2]. The ongoing delay remains a point of contention, with some U.S. observers arguing that limiting these sales is necessary to maintain a technological lead over China, while others express concern over the impact on U.S. chipmakers [2]. As Huang joins diplomatic efforts in Beijing, the future of these chip sales remains uncertain, caught between the competing national priorities of the two global powers [2].