China Signals Approval for H200 AI Chip Imports; Alibaba, Tencent Preparing Orders - NVDA-US

According to Bloomberg on Friday, January 23, Chinese authorities have informed major tech firms, including Alibaba (BABA-US) and Tencent (0700-HK), that they can begin preliminary preparations for purchasing NVIDIA's (NVDA-US) H200 AI chips. This move suggests Beijing is nearing formal approval of the chip import, which is crucial for AI computing. The development is seen as a significant signal in the ongoing U.S.-China tech and trade rivalry. Sources indicate regulators have "principally agreed" for Alibaba, Tencent, and ByteDance to proceed with detailed planning, allowing discussions on actual quantities needed. As part of the approval conditions, companies will be encouraged to procure a certain proportion of domestic chips, though specifics remain undecided. Discussions are still confidential, prompting sources to remain anonymous. The news boosted related stocks, with NVIDIA's shares rising 2.3% pre-market and TSMC (TSM-US)'s ADR gaining 1.3%. Market analysts interpret this as China advancing its H200 import plan, focusing on large cloud service providers like Alibaba and Tencent, which have invested billions in expanding data centers for AI model training. If approved, it would be a major win for NVIDIA, whose CEO has stated AI chip revenue could reach $50 billion in the coming years. Meanwhile, Chinese competitors like Huawei and Cambricon have grown rapidly during export restrictions. Despite earlier reports suggesting a halt in H200 shipments, NVIDIA, China's Ministry of Commerce, Alibaba, Tencent, and ByteDance have not commented publicly. H200, an older generation chip allowed for export to China, remains a focal point in U.S.-China tensions, with advanced AI chips still restricted due to national security concerns. NVIDIA leads the global AI accelerator market, favored by data center operators. China may approve limited H200 imports this quarter but restrict access to sensitive institutions, pending further clarification. Alibaba and ByteDance have reportedly expressed interest in over 200,000 H200 chips each. Both companies, along with startups like DeepSeek, are accelerating AI model upgrades to compete with U.S. rivals like OpenAI. NVIDIA executives note strong demand from Chinese clients but emphasize ongoing uncertainty regarding official approval timelines. China has yet to publicly confirm full approval of H200 imports. The government continues prioritizing domestic chip self-sufficiency, planning a $70 billion semiconductor subsidy package. In mid-2025, China instructed companies to avoid lower-performance H20 chips and stop purchasing RTX Pro 6000D workstation chips adaptable for AI use. Export licenses for H200 have been submitted to the U.S. government, with final details under review.