China’s customs agents are told Nvidia’s H200 chips not permitted: sources

[BEIJING] The Chinese customs authorities told customs agents this week that Nvidia’s H200 artificial intelligence (AI) chips are not permitted to enter China, indicated sources briefed on the matter.

The Chinese government officials also summoned domestic technology companies to meetings on Tuesday (Jan 13), where they were explicitly instructed not to purchase the chips unless necessary, the sources added.

“The wording from the officials is so severe that it is basically a ban for now, though this might change in the future, should things evolve,” said a source.

Beijing’s motives unclear

The H200, Nvidia’s second most powerful AI chip, is one of the biggest flashpoints in current US-Sino relations.

Though there is strong demand from Chinese companies, it remains unclear whether Beijing wants to ban it outright so that domestic chip companies can flourish, or if it is still chewing over restrictions, or whether these measures could be used as a bargaining tactic in talks with Washington.

The chip, formally approved by the Trump administration for export to China this week with some conditions, is also a hot-button issue in the US, with many China hawks concerned that the chips could supercharge the Chinese military, and erode the US advantage in AI.

The sources, who spoke on the condition of anonymity due to the sensitivity of the matter, said that the authorities had not provided any reasons for their directives, and had not given any indication whether this constitutes a formal ban or a temporary measure.

Reuters was not immediately able to ascertain whether the directives applied to existing orders for H200 chips, or only to new orders.

China’s General Administration of Customs, the Ministry of Industry and Information Technology, and the National Development and Reform Commission had not responded to requests for comment. Nvidia also did not reply to queries.

Huge orders placed

American technology industry-focused business publication The Information reported on Tuesday that the Chinese government this week told some tech companies that it would only approve their H200 purchases under special circumstances, such as for research and development (R&D) conducted in partnerships at universities.

Exemptions are being discussed for R&D purposes and universities, said one of the sources.

Keen to stifle China’s AI and technological development, the US has placed restrictions on exports of high-end chips to China since 2022.

Last year, US President Donald Trump banned and then allowed exports of a much weaker chip, the H20.

But Beijing de facto blocked those sales from around August, prompting Nvidia chief executive officer Jensen Huang to say that the company’s share of the AI chip market in the world’s second-largest economy had shrunk to zero.

The H200 delivers roughly six times the performance of the H20, making it a highly attractive product.

While Chinese chipmakers have developed AI processors such as Huawei’s Ascend 910C, the H200 is considered far more efficient for the large-scale training of advanced AI models.

Chinese technology companies have placed orders for more than two million H200 chips, priced at around US$27,000 each, far exceeding Nvidia’s inventory of 700,000 chips, sources said last month.

Conditions placed by the US on the H200 exports include a cap, limiting China to no more than half of the total chips sold to US customers. REUTERS