The U.S. tech giant’s powerful H200 chip
seemed poised to boost Beijing’s A.I. ambitions, but not a single one has been
purchased in China.
·
Nvidia
has reportedly failed to sell any of its approved H200 AI chips in China
despite permission granted by the Trump administration last year.
·
The
decision highlights growing technological mistrust between:
o the United States,
o and China.
·
The
H200 chip was expected to:
o support China’s AI ambitions,
o while benefiting Nvidia financially.
·
Former
US officials warned that allowing advanced Nvidia chip sales could:
o weaken America’s technological advantage,
o and help China accelerate AI development.
·
Instead
of purchasing Nvidia chips, Chinese authorities have encouraged companies to
adopt domestic alternatives from:
o Huawei,
o and Cambricon.
·
Donald
Trump said China declined the H200 chips partly because it wanted to:
o develop its own semiconductor ecosystem.
·
Chinese
AI firms continue to face shortages of computing power, which many consider the
biggest constraint on AI growth.
·
However,
Beijing is balancing:
o immediate AI development needs,
o with long-term technological self-reliance
goals.
·
Jensen
Huang remains optimistic that China’s market may eventually reopen to Nvidia
products.
·
Mr.
Huang recently visited Beijing alongside President Trump but reportedly did not
directly discuss H200 sales with Chinese officials.
·
Chinese
President Xi Jinping has intensified efforts to strengthen domestic technology
capabilities in:
o artificial intelligence,
o quantum computing,
o and advanced semiconductors.
·
Chinese
chipmakers have rapidly improved their technology, with some domestic products
reportedly performing on par with Nvidia’s H200 chips.
·
DeepSeek
recently announced that its latest AI model was optimised for Huawei chips
instead of Nvidia hardware.
·
Despite
export restrictions and China-related challenges, Nvidia’s global business
continues to surge.
·
Nvidia
recently reported quarterly profit of:
o $58.3 billion
and
stated it currently expects no significant AI chip sales in China.
·
Chinese
companies still rely heavily on Nvidia chips for:
o AI model training,
because
domestic production volumes remain insufficient.
·
Many
Chinese AI firms are bypassing restrictions by:
o renting remote access to Nvidia-powered
cloud computing infrastructure located outside China.
·
Startups
such as:
o MiniMax,
o and Zhipu AI
reportedly
spend several times their revenue on cloud-based AI training services.
·
Experts
warn this workaround creates:
o slower processing,
o higher data security risks,
o and dependence on foreign data centre
operators.
·
Some
US policymakers are considering tighter rules to restrict remote overseas
access to Nvidia chips.
·
Chinese
companies are expected to spend around:
o $123 billion
on AI
chips and data centres this year.
·
By
comparison, US technology firms are projected to spend approximately:
o $1 trillion
on AI
infrastructure.
·
China’s
internet regulator previously questioned Nvidia over potential security
concerns related to chips designed for the Chinese market.
·
Nvidia
has denied that its chips contain any hidden access or security backdoors.
·
Analysts
believe Beijing may be delaying approval of Nvidia purchases to:
o gain leverage,
o encourage local chip adoption,
o and possibly negotiate access to more
advanced Nvidia products such as the Blackwell chip series.
When
President Trump announced late last year that Nvidia could sell one of its most
powerful chips to China, the deal looked like a rare win-win in a fraying geopolitical
relationship. It would provide a major boost for China’s artificial intelligence
ambitions, while handing a win to America’s leading chipmaker.
Cutting-edge
A.I. systems run on staggering amounts of computing power, and Nvidia’s chips are
considered the gold standard worldwide. Chinese competitors have yet to build anything
that rivals Nvidia’s best, and Mr. Trump’s decision undercut years of U.S. policy
designed to keep those chips out of China’s reach.
Former
Biden and Trump administration officials warned the move could squander the lead
that American A.I. companies held over Chinese rivals, by helping China close the
gap until its own chipmakers could catch up to Nvidia.
But
six months on, Beijing has not allowed any of its companies to buy a single one.
The
impasse lays bare the depth of the mistrust between the world’s technological superpowers.
For decades, U.S. and Chinese companies worked side by side to create products like
the iPhone that upended industries. But the relationship has soured over the past
decade as both governments came to see technology as the fulcrum of economic supremacy.
Nvidia
is trapped in the middle. The chipmaker became the world’s most valuable company
by making its semiconductors indispensable to running A.I. systems. But Washington
and Beijing increasingly view that technology as a matter of national security,
especially after watching how it has been used to coordinate attacks in Gaza, Ukraine,
Venezuela and Iran.
Rather
than turn to Nvidia, Chinese officials have pushed domestic companies toward homegrown
alternatives from chipmakers like Huawei and Cambricon.
After meeting last week in Beijing with Xi Jinping, China’s leader, Mr. Trump said
that China’s lack of interest in the chip he had approved, known as the H200, had
been driven in part by this push for industrial self-reliance.
“They
chose not to. They want to try to develop their own,” he said.
Chinese
A.I. companies are hungry for more computing power. Kevin Xu, founder of Interconnected
Capital, a hedge fund that invests in artificial intelligence technologies, recently
spent nine days in China meeting with leading A.I. start-ups. Every one of them,
he said, pointed to the lack of computing power as the biggest factor holding them
back.
But
Chinese companies are now starting to build their A.I. systems around those constraints
rather than waiting for them to ease. And Beijing wants them to keep doing exactly
that.
“It’s
a balancing act,” Mr. Xu said. The government knows its companies need more computing
power, but it also wants to push domestic chipmakers to get better and faster.
Jensen
Huang, Nvidia’s chief executive, who traveled to Beijing
last week as part of Mr. Trump’s delegation, said he didn’t bring up the H200 chip
with Chinese officials. But he remains optimistic that the market will eventually
open, given China’s enormous appetite for A.I. chips.
“The
Chinese government has to decide — how much of their local market do they want to
protect and how much of their local market do they want to expand with more A.I.
capacity,” Mr. Huang said in an appearance on Bloomberg TV on Monday. “My sense
is that over time, the market will open.”
In
March, Mr. Xi laid out an ambitious plan to deepen China’s already decade-long push
to rely on its own technology. Over the next five years, he wants the nation to
pursue breakthroughs in fields like A.I., quantum computing and fusion energy.
The
drive for self-sufficiency is becoming more attainable as domestic chipmakers rapidly
improve their offerings. Huawei, China’s tech giant, and Cambricon,
a start-up, and others are now producing chips that perform on par with the H200.
DeepSeek,
the start-up that has come to symbolize China’s rising A.I. capabilities, has also
become a sign of the country’s shift away from Nvidia.
When
it released its latest artificial intelligence model last month, the company said
for the first time that its new system had been optimized to run on chips made by
the Chinese tech giant Huawei — a small but meaningful milestone in China’s long-running
effort to develop advanced technologies at home.
Although
Washington and Beijing have effectively blocked Nvidia’s most advanced products
from the world’s largest chip market, the restrictions have done little to slow
the chipmaker’s business. On Wednesday, Nvidia reported a quarterly profit of $58.3
billion. The company said it recorded no sales from its signature A.I. chips in
China and does not expect that to change anytime soon.
While
Chinese tech companies now use domestic chips for some tasks, they still rely on
Nvidia chips for training, the demanding process of teaching an A.I. model how to
function. Part of the reason is that Chinese chipmakers have struggled to manufacture
advanced chips at volumes sufficient to meet demand.
Many
Chinese A.I. companies are using a workaround to avoid buying their own Nvidia chips.
They are renting remote access to chips housed in data centers
operated by other companies, often outside the country. When two A.I. start-ups,
MiniMax and Zhipu AI, went public
in Hong Kong earlier this year, their disclosures showed the companies were spending
several times their revenue to train their models using “cloud services.”
But
this approach has drawbacks, said Jiang Tianjiao, an associate professor at Fudan
University in Shanghai. It means slower processing times and a higher risk of data
leaks. It makes Chinese companies reliant on third-party data center operators, which could cut them off at any time. They
also face the risk that the United States could pass regulations to close off remote
access to Nvidia chips altogether, a step that some officials in Washington have
championed.
Even
so, Chinese companies are spending far less on A.I. overall than their American
rivals. They are expected to spend $123 billion on A.I. chips and data centers this year, according to Bernstein Research. U.S. tech
companies, by contrast, are expected to spend about $1 trillion.
The
lighter spending reflects both ambition and means. Chinese companies have been slower
than their American peers to bet their futures on A.I. and they have less revenue
to put behind it. That restraint might ease the pressure on Beijing to clear the
way for Nvidia purchases, said Chris McGuire, a senior fellow at the Council on
Foreign Relations who worked on chip export controls under President Joseph R. Biden,
Jr.
Beijing
may also be wary of allowing Nvidia purchases on national security grounds. Last
July, the internet regulator, the Cyberspace Administration of China, summoned Nvidia
to explain security risks associated with the chips it had developed for the Chinese
market.
Nvidia
has said that its products contain no back doors that would give anyone remote access.
But Chinese suspicions have made it difficult to restart sales.
Mr.
Huang has not given up on China. After a last-minute invitation to last week’s summit,
he spent time in Beijing posing for photographs with people on the street and slurping
noodles on the sidewalk, part of an effort to keep ties alive in the hope that Nvidia
can one day return.
His
shuttling between Washington and Beijing underscores the value he places on the
Chinese market and the profits Nvidia could reap there, said Wendy Chang, a senior
analyst at the Mercator Institute for China Studies, a think tank. But that eagerness,
she said, may embolden Beijing to hold out for bigger concessions.
At
Washington’s request, Nvidia has held back its most powerful chips from China, restricting
sales to the United States and its allies. That chip, which Nvidia calls Blackwell,
outperforms anything currently available in the Chinese market.
“By
playing hard to get, Beijing may be hoping for more leverage in access to better
chips,” Ms. Chang said.