Suppliers of parts for Nvidia’s H200 chips paused production after Chinese customs officials blocked shipments of the newly approved artificial intelligence processors from entering China. According to The Guardian, Chinese customs authorities this week told customs agents that Nvidia’s H200 chips were not permitted to enter the country.
Nvidia had expected more than one million orders from Chinese clients. Its suppliers had been operating around the clock to prepare for shipping as early as March. Government officials also summoned domestic tech firms to warn them against buying the chips unless necessary.
Official Restrictions and Uncertainty
Authorities did not provide reasons for their directives. They also did not indicate if this was a formal ban or a temporary measure. Sources spoke on condition of anonymity due to the sensitivity of the matter.
The H200 is Nvidia’s second most powerful AI chip. It remains unclear if Beijing wants to ban the chips outright to encourage domestic chip companies to develop their own. The Chinese government may still be considering restrictions, or it could all be a bargaining tactic.
Complex US Trade Policy
The situation is convoluted. The Trump administration allowed the US-designed, Taiwanese-manufactured H200 chips to be exported to China. The US government reportedly takes a share of the profits.
But the US government then decreed that completed chips be sent to a US laboratory for testing before going to China. This allows a 25% tariff to be imposed as they pass through the US. The tariff was also applied to chipmaker AMD’s MI325X processor.
Strategic Debate Over Chip Sales
Experts and analysts are split on whether selling the H200 to China is strategically sound. Those in favor say its availability might slow China’s progress developing similar chips. It keeps Chinese companies dependent on US technology.
Those against say the H200 is powerful enough to be used in weapons systems. China’s military might one day deploy such systems against the US or its allies. The chips remain one of the biggest flashpoints in US-Sino relations.
Nvidia did not immediately respond to a request for comment made outside regular business hours. Reuters could not immediately verify the report, which appeared in the Financial Times citing two people with knowledge of the matter.
