China Signals It May Snub Nvidia’s H200 Chips, Undermining US AI Strategy
China appears to be turning away from Nvidia Corp’s H200 artificial intelligence chips, a move that could weaken Washington’s strategy of countering Chinese tech champions by reintroducing US competition into the market. White House AI policy chief David Sacks said Beijing is prioritising domestic semiconductors over American imports, citing recent news reports.
Speaking in an interview, Sacks said China has “figured out” the US approach of allowing shipments of Nvidia’s H200 — a deliberately lagging chip — and is choosing not to embrace it. “They’re rejecting our chips,” Sacks said, adding that the likely motivation is China’s long-term push for semiconductor self-reliance.
US Strategy Faces Early Doubts
Earlier this week, US President Donald Trump announced that his administration would allow Nvidia to export H200 chips to China, reversing a tighter stance on advanced AI hardware. The decision, backed by Sacks, was designed to undercut domestic Chinese players such as Huawei Technologies by introducing US competition at home.
However, by Friday, Sacks publicly questioned whether the strategy would succeed. He suggested Beijing is unwilling to accept the chips precisely because doing so could slow the growth of its own semiconductor ecosystem.
The comments raise uncertainty over Nvidia’s prospects in China, a data centre market the company has excluded entirely from its forecasts. Nvidia chief executive Jensen Huang has previously estimated China’s AI data centre opportunity at around US$50 billion annually. Bloomberg Intelligence analysts put potential H200 sales in China at about US$10 billion per year — but only if Beijing allows widespread adoption.
Nvidia, China Respond
In a statement, Nvidia said it continues to work with the US government to secure licences for vetted Chinese customers. The company criticised broad export controls, arguing they have accelerated foreign competition and cost US taxpayers billions of dollars in lost revenue.
China’s response was more diplomatic. Liu Pengyu, a spokesperson for the Chinese embassy, said cooperation in technology and economic matters serves the interests of both nations and urged the US to take concrete steps to maintain global supply chain stability.
Still, China’s policy direction appears unchanged. Bloomberg recently reported that Beijing is considering incentives worth up to US$70 billion to support domestic chipmakers, reinforcing its determination to reduce reliance on foreign suppliers — even if US chips become available again.
Why the H200 May Not Be Appealing
The H200, introduced in 2023, belongs to Nvidia’s Hopper generation and sits below its latest Blackwell chips and the upcoming Rubin architecture. US officials justified allowing exports by noting that the H200 is already around 18 months behind Nvidia’s cutting-edge products.
Sacks said this technological gap was intentional. The administration believed selling “lagging” chips could siphon market share from Huawei without materially strengthening China’s AI capabilities. However, he acknowledged that Beijing may have anticipated this logic.
“What you see is China’s not taking them because they want to prop up and subsidise Huawei,” Sacks said, adding that Chinese authorities appear unwilling to let US firms regain influence in strategic sectors.
Huawei’s Growing Capabilities Complicate the Picture
US officials also assessed that Huawei now offers AI systems with comparable performance through large-scale architectures such as its Cloud Matrix 384 platform, which links hundreds of processors to compensate for weaker individual chips. That capability reduced the perceived downside of allowing H200 exports.
Some policymakers viewed the H200 decision as a compromise after Nvidia lobbied for permission to sell an even more advanced Blackwell-based chip to China, according to people familiar with the discussions.
Unclear Outcome Ahead
Despite Trump saying Chinese President Xi Jinping responded positively to the idea of H200 approvals, Beijing has neither publicly accepted nor formally rejected the chips. Earlier this year, China effectively shunned Nvidia’s H20, a less capable processor previously cleared for export.
For now, China’s silence underscores a deeper reality: the race for AI dominance may hinge less on access to foreign chips and more on Beijing’s unwavering commitment to domestic semiconductor independence.
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