ByteDance and Alibaba are in discussions with Nvidia about purchasing the H200 chips. The chips have recently been approved by US President Donald Trump for export to China, with a 25% surcharge on each unit, following a ban on anything above Nvidia’s H20 chips. It would not be an exaggeration to say that this was a huge surprise, given that on paper the H200 chip is at least a generation ahead of anything China can currently produce.
The desire of companies such as ByteDance and Alibaba to buy the advanced semiconductor chips, as reported by Reuters quoting inside sources, flies in the face of previously reported instructions from Beijing that companies do not use Nvidia chips, but use domestically produced ones. But this change of approach is not necessarily a surprise.
The big questions are what if anything did China agree to in return (or is it just the surcharge they have to deal with), and how important is this in terms of the great AI race in progress between China and the US. Nvidia’s CEO Jensen Huang has said that China is only a hair’s breadth behind the US in the AI race, and the H200 chips would give China a huge boost in developing its AI models. So, while the decision would improve Nvidia’s sales, have they handed away the US’ competitive edge?