China has given the green light for the first time to the purchase of NVIDIA’s H200 chips for AI, which has allowed several of the country’s main technology companies to import these semiconductors. We had been waiting for a few weeks for Beijing to comment on the matter, since NVIDIA was multiplying its chip production to be prepared for this moment. Although there are some rules that companies must follow.
The decision. According to account Reuters, ByteDance, Alibaba and Tencent have received authorization to acquire more than 400,000 H200 chips in total, an operation valued at approximately $10 billion. More Chinese companies are expected to receive the go-ahead in the coming weeks, although specific conditions have not yet been detailed.
Visiting. The authorization comes during NVIDIA CEO Jensen Huang’s visit to China this week. Huang has toured Shanghai, Beijing and Shenzhen on his traditional annual trip ahead of the Lunar New Year celebrations. However, according to account the Wall Street Journal, has not met with senior Chinese officials.
Why is it important. The approval breaks a stalemate that has lasted for months. In April, the United States initially banned the sale of H20 chips to China, a less powerful version that NVIDIA had designed specifically for the Chinese market. Although Washington turned back with the H20, Beijing then told companies not to buy themalleging cybersecurity issues that NVIDIA denied.
After a meeting between Trump and Xi Jinping In South Korea last October, the United States authorized the export of the H200, a significantly more powerful chip. Now, China is doing its part by approving the import of these chips into the country.
The Beijing dilemma. The issue is that China was preparing for a world completely independent of American technology, so after approval it dances in a delicate balance. On the one hand, Beijing wants its best AI developers to be able to build new models and applications quickly, something that NVIDIA chips would greatly facilitate. On the other hand, it has been cultivating a self-sufficient semiconductor industry for years. Although according to account WSJ, the country has encountered resistance especially from private sector companies accustomed to using NVIDIA software products and tools.
The conditions of the agreement. According to Reutersthe approvals include restrictions that are still being defined. But what is known is that Chinese companies that want to buy American chips have had to submit documents to authorities explaining how they plan to use them. The country’s authorities have indicated that any purchase must be for uses considered necessary, such as advanced research and development in AI, according to inform WSJ.
Some companies have also included plans to purchase chips made in China in their agreements, as authorities require companies to use locally produced semiconductors for some AI training tasks and most inference-related workloads.
btechnological right. The H200 represents a significant qualitative leap, exceeding the performance of the H20 by approximately six times. Although Chinese companies like Huawei now they have products which rival the performance of the H20, they are still far behind the H200. And in order not to be left behind in the AI race, large Chinese technology companies have lined up to order more than two million H200 chips, far exceeding NVIDIA’s available inventory.
Impact. NVIDIA had seen its share of AI chips in the Chinese market fall from 95% to virtually zero as it awaited actions from both governments, according to declared Huang in October. Meanwhile, Chinese companies have tried fill that void using a large number of lower power chips to increase processing capacity.
And now what. According to account WSJ, Huang is soon scheduled to travel to Taiwan, also part of his annual routine, where he is expected to speak with suppliers about manufacturing more H200 chips to feed demand in China. After the October trade truce between the US and China, it seems that the waters have calmed down, at least on the surface.
Cover image | Arthur Wang and NVIDIA
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