China eases limits on Nvidia H200 chips as AI race escalates

China has begun to allow small batches of Nvidia's H200 artificial intelligence chips into mainland China, a move aimed at bolstering its leading AI companies in the global race against US rivals. ByteDance and Tencent have each received approximately 10,000 H200 processors in recent weeks, with other Chinese tech groups potentially receiving similar approvals soon. This easing comes as Beijing balances supporting its AI industry with its long-term goal of fostering a self-sufficient domestic semiconductor sector.

While Chinese companies have US approval to purchase up to 100,000 H200s each, Beijing has requested that most of these chips remain outside mainland China. Companies are permitted to ship H200 processors to Hong Kong for use there, but this option faces limitations due to Hong Kong's insufficient data center capacity and power supply constraints, making large-scale deployment difficult. This situation presents a dilemma for Chinese firms, as everyone needs the chips but struggles with infrastructure for their deployment.

This development also provides an outlet for Nvidia, which has an estimated 500,000 H200 chips in stock, largely earmarked for Chinese customers, but whose sales have been hampered by Beijing's prior restrictions. Nvidia partners, including Lenovo, have reportedly informed Chinese customers they can resume placing orders for products incorporating H200 chips, though these still require separate approval from China's National Development and Reform Commission. The H200 is considered at least two generations behind Nvidia's most powerful chips, which remain inaccessible to Chinese buyers due to US export controls. The US Commerce Department has approved around 10 Chinese companies, including Alibaba, Tencent, ByteDance, and JD.com, to purchase H200 chips, with each approved customer able to buy up to 75,000 units under US licensing terms. US rules also mandate that Chinese buyers demonstrate sufficient security procedures and non-military use, with Nvidia required to certify adequate US inventory.