Perhaps China will buy Nvidia's H200 chips after all

The delivery of second-tier AI chips to the People's Republic of China remains in limbo. Initially, there was a ban by the US President, ostensibly due to threats to US national security. After the softening of the sales ban, the Chinese government prohibited the import of second-tier chips like Nvidia's H200. Now, Beijing has permitted the companies Alibaba, Bytedance, and Tencent to import a total of over 400,000 H200 chips. However, this comes with conditions that are still unclear.

This is reported by Reuters, citing several insiders. According to them, other Chinese companies have also applied for import permits. However, the official conditions are still being worked out. Another source told Reuters that Beijing's conditions are too restrictive. This is reportedly why the three successful applicants have not yet ordered any artificial intelligence processors.

It is clear that Beijing is actually not keen on the import of foreign second-tier AI chips. Government officials have instructed companies to use them only under special circumstances, for example, for research at universities. Both potential sellers like AMD and Nvidia, as well as their prospective customers, are eagerly awaiting the conditions for import permits for commercial use. In the run-up, it was discussed that Chinese buyers would be required to purchase a certain quantity of chips produced in China for every imported AI chip.

This reflects a condition of the US sales permits. Not only must 25 percent of the revenue be paid as a penalty tax, but for every chip exported to China, at least one such chip must go to a domestic buyer. Furthermore, only specific Chinese buyers are permitted, which must be verified. The sale of Nvidia's better Blackwell series chips (GB100, GB102, GB200) remains taboo.

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