Nvidia's H200 AI Chip Production Halted in China Amid Customs Issues

Nvidia NVDA stock Nvidia’s return to the Chinese market has hit a major roadblock due to its latest problems with sales of high-end H200 AI chips in the country. Days after Chinese customs officials moved to block the newly-approved processors from entering the mainland, suppliers of key components for the AI chip have reportedly halted production lines. Citing two people with knowledge of the matter, a report by The Financial Times said that the halt marks a sudden reversal just days after the US government officially cleared the way for the shipments. It has been reported that manufacturers of essential parts, including printed circuit boards (PCBs), that are required to package H200 chips have paused operations to avoid mounting inventory losses on hardware. US approval for Nvidia chips and China’s rejection While the Trump administration recently issued a 25% tariff-based approval for the H200, the General Administration of Customs in China reportedly executed its own counter-strategy. Last week, reports said that customs officers were told that Nvidia H200 are not allowed in the country. “The wording from the officials is so severe that it is basically a ban for now,” news agency Reuters reported last week. The move reportedly caught Nvidia off-guard, particularly when the American chipmaker has pushed hard to sell its AI chips in China and the first batches of H200 chips had already arrived in Hong Kong this week. Meanwhile, multiple other reports said that while tech giants like Alibaba, ByteDance and Tencent are eager to secure the H200 for its superior performance, the Chinese government pressured them to prioritise domestic alternatives, such as Huawei’s Ascend chips, and not use them for purposes that may be a threat to the national security. According to a FT report, despite having placed orders for over 2 million H200 units, some Chinese customers are reportedly cancelling their orders due to the uncertainty. End of Article