NVIDIA’s H200 AI chip sales to China remain on hold for nearly two months, even after the approval from US President Donald Trump. According to the Financial Times, the exports are pending a US national security review. In the meantime, Chinese customers are currently not placing H200 chip orders with Nvidia until Nvidia obtains its clearance orders. Customers are curious to know whether Nvidia will be able to secure the licences or what further restrictions may emerge.
The shares of Nvidia declined sharply yesterday, posting a 2.84% drop with additional losses seen after the closing bell. The reasons include OpenAI expressing its reservations about the performance of Nvidia’s GPUs, along with this, the loss intensified with the growing uneasiness of Nvidia’s AI chip export to China.
NVIDIA at the Centre of US–China Tech Diplomacy
Xi Jinping, the President of China, met with Trump in late December to discuss the easing of the tech restrictions. In January, the Commerce Department eased the export curbs on H200 for China. Though it requires a licence application to be reviewed by the US Department of State, the Department of Defence, and the Energy Department. NVIDIA’s CEO Jensen Huang said last week that he hopes that China will allow the US technology giant to sell its powerful H200 artificial intelligence chip in the country, as the licensing is being considered.
According to the reports of the Financial Times, the Commerce Department had completed its analysis, but the State Department was pushing it further, delaying the license.
Thereby, making tougher restrictions to make it harder for China to use the H200 chips in ways that would undermine the US national security. Trump also said that he would allow the chip sales to ‘approved customers’ in China and collect a 25% fee. NVIDIA responded to it optimistically and reported that they are welcoming the move as it would benefit manufacturing and generate employment opportunities in the US. Last month, several reports quoted that the first batch of Nvidia’s H200 artificial intelligence chips was approved by China, making a shift in position as China seeks to balance its AI needs against fostering domestic development.
Will NVIDIA Wipe the Floor?
The H200 is Nvidia’s second most powerful AI chip, which became the biggest flashpoint in the US-China relations. There was strong demand from Chinese firms earlier, but as the uncertainty persists, the future of the chip remains unclear. Experts and analysts have split opinions on the issue of whether selling the H200 to China is strategically a good idea. Those in favour opine that the availability of Nvidia’s H200 would slow the progress of China developing similar chips and keep the Chinese companies dependent on the US technology. While those against say that the H200, for instance, would be powerful enough to be used in weapons systems that China’s military might one day deploy against the US or its allies.
As Nvidia is a US company founded and headquartered in California, it is subject to the US laws and regulations. Additionally, Huang, although moved to the US and obtained citizenship, was born in Taiwan.
