China has reportedly blocked the import of Nvidia's advanced H200 artificial intelligence chips, throwing supply chains into disarray and escalating technological tensions with the United States. According to a report in the Financial Times, Chinese customs officials have prevented shipments of the newly approved processors from entering the country.
Production Paused Amidst Mounting Confusion
Suppliers manufacturing parts for the Nvidia H200 have been forced to put production on hold following the Chinese directive. The report, citing two anonymous sources, states that these suppliers had been working around the clock to prepare for shipping as early as March, anticipating more than one million orders from Chinese clients.
Reuters confirmed that Chinese customs authorities informed agents this week that the H200 chips were not permitted entry. The nature of the restriction remains unclear, with sources indicating authorities have not specified whether this is a formal, permanent ban or a temporary measure. No official reason has been provided.
A Complex Web of US-China Trade Policies
The situation is further complicated by recent actions from the United States. The Trump administration had cleared the US-designed, Taiwan-manufactured H200 chips for export to China. However, it decreed that the completed chips must first be sent to a US laboratory for testing before reaching China.
This circuitous route allowed the US to impose a 25% tariff on the chips as they pass through American territory, a tariff also applied to competitor AMD's MI325X processor. The US government is also reportedly set to take a share of the profits from these sales.
Strategic Implications and Domestic Pressures
The H200, Nvidia's second most powerful AI chip, has become a significant flashpoint. Analysts are divided on the strategic wisdom of selling it to China. Some argue its availability could slow Beijing's progress in developing domestic alternatives and maintain Chinese reliance on US technology. Others warn the chip's power makes it suitable for potential military applications, including weapons systems.
Simultaneously, the Chinese government has summoned domestic tech firms, warning them against purchasing the H200 chips unless absolutely necessary. This suggests Beijing may be using the import block as a tactic to encourage its domestic semiconductor industry or as a bargaining chip in wider trade negotiations.
The combined effect of the Chinese import block and the US tariff creates a highly convoluted trade environment, leaving suppliers and clients in a state of uncertainty. Nvidia did not immediately respond to a request for comment made outside regular business hours.
