China to Impose Limits on Nvidia H200 Chip Access

Beijing is moving towards imposing restrictions on Chinese companies' access to advanced Nvidia H200 chips, despite the elected President Donald Trump announcing that the United States would allow the export of this technology to China as part of the country's efforts to achieve self-sufficiency in semiconductor manufacturing.

According to two sources familiar with ongoing discussions in Chinese regulatory circles, authorities are exploring a framework that would allow limited access to the H200 chip - the second most powerful artificial intelligence chip produced by Nvidia - with purchases permitted only after completing pre-approval procedures.

Potential Access Mechanism: Justified Purchase Requests

According to the sources, potential buyers would be required to submit a request detailing:

• The reason for their need for the chips,

• And why local companies cannot meet that need.

However, the sources confirmed that no final decision has been reached yet.

Trump Announces Approval for H200 Exports… with a “25% Fee”

Trump wrote on Monday on the Truth Social platform that he informed Chinese President Xi Jinping that the United States would allow Nvidia to “ship H200 products to approved customers in China… under conditions that ensure national security.” Trump stated that President Xi welcomed the decision.

Trump added that “25% will be paid to the United States”, without detailing the mechanism.
It is worth noting that a prior agreement allowing Nvidia to sell the less advanced H20 chip for 15% of revenues was not finalized due to the company and Trump’s administration failing to establish a workable legal mechanism to collect this amount.

Background of the Ban: Military Concerns

The Biden administration had banned the export of H200 chips and other advanced AI technologies to China due to fears they would be used for military purposes.

Nvidia CEO Jensen Huang has lobbied for the ban to be lifted. Proponents of lifting restrictions - including the White House's chief AI advisor, David Sachs - argue that allowing exports would make China reliant on American technology rather than developing local alternatives.

Opponents see the decision as giving China a significant boost in its technical capabilities.

U.S. Ban Accelerates China's Development of Domestic Chips

China has used the U.S. ban to enhance the capabilities of its local companies by:

• Tightening customs inspections on chip imports,

• Providing energy support to data centers using domestic chips,

• And encouraging companies like Huawei and SMIC to develop competing processors to Nvidia.

The National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) may discuss additional measures to ensure the competitiveness of local products, such as a ban on public sector purchases of the H200 chip.

Chinese Tech Companies Welcome Some Relief

The return of access to advanced Nvidia chips will be welcomed by tech giants such as:

• Alibaba

• ByteDance

• Tencent

Despite their increasing reliance on Chinese chips for some core AI applications, they still prefer Nvidia chips due to:

• Superior performance,

• Ease of maintenance,

• And compatibility with current training architectures.

Many of these companies have been forced to train their models abroad to gain access to chips that are banned for use within China.

Potential Opposition from Congress

Despite Trump's approval, the decision faces resistance in Congress, as a group of bipartisan senators has introduced a bill to prevent the export of chips like the H200 to China for 30 months.

The future of the legislation is uncertain, especially as a few Republicans - including some who had called for stricter oversight of technology exports during Biden's tenure - have publicly criticized Trump's decision.

China Previously Restricted H20 Purchases

Despite Trump's previous permission for the sale of the H20 chip to the Chinese market, regulatory authorities in Beijing restricted access, claiming that its performance does not offer significant improvements compared to available Chinese alternatives.