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Nvidia shares are trading higher today following reports that China has cleared the way for ByteDance, Alibaba and Tencent to start buying Nvidia’s H200 advanced artificial intelligence (AI) chips. US President Donald Trump had previously authorized the export of H200 to the communist country, but Chinese companies were apparently waiting for the government’s nod.
Chinese regulators have previously been hesitant to approve imports, fearing they would undermine the growth of domestic chipmakers such as Huawei. However, the tide turned this week during Nvidia CEO Jensen Huang’s official visit to China.
China reportedly wipes out H200 imports
According to reportsThe first batch of approvals covers more than 400,000 H200 chips worth an estimated $10 billion. ByteDance, Alibaba and Tencent are the first in line, and a queue is forming for other domestic companies. Sources suggest that Beijing’s “nod” comes with strings attached. Regulators are expected to require a bundle ratio, where companies must buy a certain percentage of domestic AI chips (such as Huawei’s Ascend series) for every imported Nvidia chip.
Why the H200 matters to China
The H200 is a significant leap from the “nerfed” H20 chips previously available in the Chinese market. It offers approximately six times the performance of H20, making it essential for training the massive large language models (LLMs) required to compete with Western entities such as OpenAI.
In a social media post last month, Trump said exports were allowed “under conditions that allow for continued strong national security,” to which he added: “President Xi responded positively!
It’s worth noting that the export license covers the Nvidia H200 accelerator, which is the company’s second most powerful AI chip and a substantial upgrade over the previously limited, lower-powered H20 variant.
The more advanced, next-generation Blackwell chips and the upcoming Rubin chip families will remain off-limits to Chinese customers, ensuring America maintains its technological edge.
The agreement specifies that exports will only be made to “approved commercial customers”, with the details and vetting process being finalized by the Department of Commerce.
The resumption of exports to China is positive for Nvidia
The start of exports to China, meanwhile, would be a big relief for Nvidia, which has been severely limited in the lucrative market since the initial export controls were introduced. Huang has actively lobbied the administration, arguing that overly strict restrictions will only force China to accelerate its own domestic development of AI chips, ultimately undermining the US lead.
Nvidia is losing market share in China and the company has warned that it is losing its competitive edge in a country where it once had a dominant market share. During the May 2026 fiscal quarter earnings call, Nvidia CFO Colette Kress said: “Losing access to the Chinese AI accelerator market, which we believe will grow to nearly $50 billion, would have a material adverse effect on our business going forward and would benefit our foreign competitors in China and around the world.
Nvidia chips were allegedly smuggled into China
Notably, while the export of Nvidia’s high-end AI chips to China has been banned, there have been repeated reports of them being smuggled into the country. DeepSeek, which has gained attention for developing cost-effective artificial intelligence models, reportedly uses limited Nvidia Blackwell chips. The method of acquisition is described as a complex smuggling operation, where the advanced chips were allegedly first sent to data centers in countries where their purchase is permitted. They were then allegedly dismantled from the servers and re-exported, possibly in parts, to China, bypassing inspections and customs checks.
In response to the allegations, Nvidia vehemently denied, saying the company had “seen no substantiation or received any tips” to support the claims of smuggling through external data centers. Nvidia says it insists its partners comply with all applicable laws.
The controversy drew considerable attention to Nvidia’s billing practices in Singapore. Public filings have shown that a substantial portion of Nvidia’s revenue, around 22-28% in some periods, is billed through Singapore.
A significant portion of Nvidia’s revenue is accounted for in Singapore
However, Nvidia and the Singapore government have clarified that this figure does not reflect the physical determination of the chips. Nvidia emphasizes that its revenue is reported based on the customer’s billing location. Many large US and European corporations have large business entities in Singapore and use them for centralized invoicing, even if products are ultimately shipped to data centers in the US or other Western countries. Nvidia said that “the majority of shipments associated with Singapore revenue were to locations other than Singapore, and shipments to Singapore were insignificant.
Singapore’s Ministry of Trade and Industry (MTI) also highlighted that the physical delivery of products to Singapore represents a very small fraction (reportedly less than 1%) of the revenue billed there. While Singapore is an international trade hub, its government expects companies to comply with both US export controls and local laws, and has launched an investigation to ensure its trading system is not being abused to circumvent global restrictions.
Despite the clarifications, the dramatic increase in revenue billed through Singapore prompted both the US government and Singaporean authorities to launch investigations into whether Singapore-based intermediaries were being used to illegally route restricted chips, including those that went to DeepSeek. In fact, the Singaporean police made an arrest in connection with the illegal GPU re-export scams.
The CCP supports “civilian-military” fusion
The Chinese Communist Party (CCP) pursues a military-civilian fusion strategy that seeks to integrate private sector technological innovation, including data and AI capabilities, with the People’s Liberation Army (PLA). This reinforces the government’s interest in accessing corporate data for strategic purposes.
The Chinese government has consistently denied that it forces companies to illegally collect or transmit data in violation of the law. Chinese officials typically state that all data collection and transfer is “in accordance with the law” and emphasize that their laws also include provisions to protect data and user privacy, such as PIPL. Foreign concerns see unfounded accusations aimed at hindering the growth of Chinese businesses.
China supports its tech companies
China, which has cracked down on its tech companies, notably Alibaba earlier, is now supporting its tech companies in the midst of an AI war with the US. In February 2025, Chinese President Xi Jinping met with the country’s entrepreneurs, including Alibaba co-founder Jack Ma, at a symposium. Mao’s attendance at the event with Beijing was made all the more important by the fact that the Chinese billionaire was the face of China’s crackdown on tech tycoons the Communist Party believed had become too powerful.
Alibaba is reportedly considering launching its semiconductor division
Alibaba is among the Chinese companies that have developed AI chips and even secured a major deal with state-owned telecommunications company China Unicom to supply AI chips for a new data center. The move underscores Beijing’s accelerating drive for technological self-sufficiency and marks a major victory for domestic chipmakers amid escalating geopolitical tensions and curbs on U.S. exports.
Alibaba is said to be moving forward with plans to spin off and launch its specialty semiconductor division T-Head (also known as Pingtouge). The strategic move follows a broader trend among Chinese tech giants to capitalize on massive demand for domestic AI infrastructure.
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