China has granted approvals for the import of over 400,000 Nvidia H200 AI chips, valued at approximately $10 billion, according to reports, signaling a potential thaw in technology trade tensions with the United States. The move follows a visit to China by Nvidia CEO Jensen Huang and a prior decision by the Trump administration to allow exports of the H200 chip, albeit with security considerations.
The initial approvals are expected to benefit major Chinese tech companies including ByteDance, Alibaba, and Tencent, with further approvals anticipated for other domestic firms. However, Beijing is reportedly implementing a “bundle ratio” requirement, mandating that companies purchase a certain percentage of domestically produced AI chips, such as those from Huawei’s Ascend series, for every Nvidia H200 chip imported. This condition aims to bolster the growth of China’s indigenous chip industry.
The H200 represents a significant upgrade over the previously available H20 chip in China, offering approximately six times the performance. This enhanced capability is crucial for developing and training the large language models (LLMs) necessary to compete with Western AI developers like OpenAI. President Trump stated last month that the exports were permitted “under conditions that allow for continued strong National Security,” and that Chinese President Xi Jinping “responded positively!”
While the H200 is now accessible, the more advanced Blackwell and Rubin chip families will remain restricted, ensuring the United States maintains a technological advantage. Exports will be limited to “approved commercial customers,” with the Department of Commerce overseeing the vetting process.
The resumption of exports to China is a welcome development for Nvidia, which has faced constraints in the lucrative Chinese market since initial export controls were imposed. Nvidia’s CFO, Colette Kress, warned in May that losing access to the Chinese AI accelerator market, estimated to grow to nearly $50 billion, would “have a material adverse impact on our business going forward and benefit our foreign competitors in China and worldwide.”
Reports have surfaced alleging that Nvidia’s top-of-the-line AI chips have been smuggled into China despite export restrictions. DeepSeek, an AI model developer, has allegedly been utilizing restricted Nvidia Blackwell chips obtained through a complex operation involving shipments to countries permitted to purchase them, subsequent dismantling, and re-exportation to China. Nvidia has denied these allegations, stating it has “not seen any substantiation or received tips” to support the claims and insists its partners comply with all applicable laws.
The controversy has similarly drawn attention to Nvidia’s billing practices, with a substantial portion of its revenue – between 22-28% in some periods – being billed through Singapore. Both Nvidia and the Singaporean government have clarified that this does not reflect the physical destination of the chips, attributing the practice to centralized invoicing by large corporations. However, both the U.S. Government and Singaporean authorities have launched investigations into whether Singapore-based intermediaries were used to illegally route restricted chips, including those potentially destined for DeepSeek. Singaporean police have reportedly made arrests related to fraud concerning the illegal re-export of GPUs.
The Chinese government’s support for its tech companies is also growing, reflecting a broader strategy of Military-Civil Fusion, which seeks to integrate private sector technological innovation with the People’s Liberation Army. Alibaba, which has developed its own AI chips and secured a deal with China Unicom, is reportedly considering listing its semiconductor division, T-Head, as part of Beijing’s push for technological self-sufficiency.
Despite previous crackdowns on its tech sector, China is now actively backing its companies amid escalating competition with the United States in the AI arena. In February 2025, President Xi Jinping met with Chinese entrepreneurs, including Alibaba’s Jack Ma, signaling a shift in policy towards supporting domestic innovation.
