China has begun allowing small batches of Nvidia's H200 chips into the mainland to help its leading AI companies compete with US rivals. ByteDance and Tencent have each received about 10,000 H200 processors in recent weeks, with other Chinese tech groups potentially securing similar approvals. The H200 is at least two generations behind Nvidia's most advanced chips, which remain blocked by US export controls.

While US licenses permit Chinese firms to buy up to 100,000 H200s each, Beijing wants most chips kept outside the mainland to support domestic chipmakers like Huawei. Regulators have allowed shipments to Hong Kong, but the territory lacks sufficient data center capacity due to power constraints. Nvidia holds roughly 500,000 H200 chips in inventory for Chinese clients, and partners such as Lenovo have resumed taking orders, though purchases still require approval from the National Development and Reform Commission.

China's import controls reflect its push for semiconductor self-sufficiency, yet its lack of advanced chipmaking equipment means Nvidia imports remain necessary for AI training. Chinese labs including Moonshot, Alibaba, DeepSeek, and Z.ai have recently released models narrowing the gap with US counterparts like Anthropic's Mythos 5. Domestic chips are increasingly used for inference, while Nvidia processors remain essential for the more complex training phase.