Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Suppliers of parts for Nvidia’s H200 chips, which recently gained US approval for sale in China, have paused production after local customs officials blocked shipments of the AI processors.
Makers of essential H200 components, such as the printed circuit board, have paused manufacturing following moves to prevent chip shipments entering China, according to two people with knowledge of the matter.
A customs ban, if sustained, would be a blow to Nvidia. The company has heavily lobbied Washington and Beijing to allow sales of its H200 chips, an older generation of AI processors, in China. After US President Donald Trump indicated he would permit sales last month, Nvidia began stepping up production.
The company had expected more than 1mn orders from Chinese clients, according to the people with knowledge of the matter. Its suppliers had been working around the clock to prepare for deliveries initially planned for as early as March.
However, Chinese customs officials on Tuesday summoned logistics companies in Shenzhen to tell them they could not submit customs clearance applications for H200 chips, one of the people said, though it was unclear if the ban was temporary.
The person added Nvidia was caught by surprise by the customs authorities’ move, which occurred as early shipments of H200s arrived in Hong Kong this week.
The regulatory uncertainty led Nvidia’s parts suppliers to pause production this week to avoid incurring inventory write-offs, the people said.
In the case of the printed circuit boards, they are specifically designed for H200 chips and cannot be used for other products, said Chu Wei-Chia, analyst at SemiAnalysis.
Beijing has been pushing tech companies to use domestic chips in a bid to achieve self-sufficiency in semiconductor production.
The FT previously reported that regulators were discussing ways to permit limited access to H200 chips, which tech giants such as Alibaba, ByteDance and Tencent prefer because of their higher performance and easier maintenance.
“The question of which government agency is regulating AI and the semiconductor industry in China is really complicated right now,” said George Chen, partner and co-chair of digital practice at The Asia Group.
“There are competing views between the [National Development and Reform Commission], the [Ministry of Industry and Information Technology] and the Cyberspace Administration of China about what role Nvidia should play, which is leading to a confusing mixture of policies.”
Potential restrictions being discussed include a licensing regime in which only companies with advanced AI model training needs can apply and a mandated ratio of domestic versus imported chips, said the people familiar with the matter.
Uncertainty around the H200 chip has also prompted many Chinese customers to reassess their options.
One Chinese seller of Nvidia AI servers said many local customers had cancelled orders for the H200. Instead, they have switched to the more advanced B200 and B300, which are banned for export into China by Washington, leading to an active black market for the chips.
This is not the first time Nvidia has faced restrictions from Chinese authorities. Last summer, Beijing stopped the country’s tech giants from purchasing the H20, a lower-performance version of the H200 designed to comply with US export controls.
Nvidia and China’s General Administration of Customs did not immediately respond to requests for comment.
Additional reporting from Michael Acton in San Francisco and Melissa Heikkilä in London
Credit: Source link
