The U.S. government has approved approximately 10 Chinese companies, including major players like Alibaba, Tencent, ByteDance, and JD.com, to purchase Nvidia's H200 AI chips. However, no deliveries have occurred yet, leaving this significant technology deal in a state of uncertainty.
Nvidia's CEO, Jensen Huang, is currently in China seeking to advance these stalled sales, having joined a White House delegation after an invitation from President Donald Trump. This trip raises hopes that it could facilitate the sale of H200 chips, which are crucial for AI development.
Historically, Nvidia held a dominant position in China's advanced chip market, accounting for about 95% before U.S. export restrictions were tightened. China previously represented 13% of Nvidia's revenue, and Huang has estimated that the AI market in China could be worth $50 billion this year.
Each approved Chinese buyer can acquire up to 75,000 chips under U.S. licensing terms, but the actual sales have been hindered by Chinese government guidance urging firms to focus on domestic chip development. This reflects a strategic move by Beijing to strengthen its own AI capabilities and reduce reliance on foreign technology.
The situation is further complicated by U.S. regulations requiring buyers to prove they have adequate security measures in place and that the chips will not be used for military purposes. Additionally, a revenue-sharing arrangement negotiated by Trump stipulates that 25% of the sales revenue would go to the U.S., which has raised concerns in China about potential vulnerabilities.
The ongoing delays have been welcomed by some U.S. hardliners who argue that allowing Nvidia to sell more chips to China could diminish the competitive edge of U.S. firms in the AI sector. Chris McGuire from the Council on Foreign Relations expressed skepticism about the benefits of these sales, suggesting they could ultimately harm U.S. interests in the tech race with China