Beijing's motives for the directives are not clear
Also unclear if this is a ban or temporary measure, sources say
US only formally approved H200 exports to China this week
China keen to promote development of domestic chip companies
Jan 14 (Reuters) - Chinese customs authorities told customs agents this week that Nvidia's NVDA.O H200 artificial intelligence chips are not permitted to enter China, according to three people briefed on the matter.
Nvidia edged lower in premarket.
Chinese government officials also summoned domestic technology companies to meetings on Tuesday where they were explicitly instructed not to purchase the chips unless necessary, two of the people and a third source said.
"The wording from the officials is so severe that it is basically a ban for now, though this might change in the future should things evolve," one of the people said.
BEIJING'S MOTIVES UNCLEAR
The H200, Nvidia's second most powerful AI chip, is one of the biggest flashpoints in current U.S.-Sino relations.
Though there is strong demand from Chinese firms, it remains unclear whether Beijing wants to ban it outright so that domestic chip companies can flourish, or is still chewing over restrictions, or whether these measures could be used as a bargaining tactic in talks with Washington.
The chip, formally approved by the Trump administration for export to China this week with some conditions, is also a hot-button issue in the U.S., with many China hawks concerned that the chips could supercharge the Chinese military and erode the U.S. advantage in AI.
The sources, who spoke on condition of anonymity due to the sensitivity of the matter, said authorities had not provided any reasons for their directives and had not given any indication whether this constitutes a formal ban or a temporary measure.
Reuters was not immediately able to ascertain whether the directives applied to existing orders for H200 chips or only to new orders.
China's General Administration of Customs, the Ministry of Industry and Information Technology and the National Development and Reform Commission had not responded to Reuters requests for comment at the time of publication. Nvidia also did not reply to Reuters queries.
HUGE ORDERS PLACED
The Information on Tuesday reported that the Chinese government this week told some tech companies it would only approve their H200 purchases under special circumstances, such as for research and development conducted in partnerships at universities.
Exemptions are being discussed for R&D purposes and universities, said one of the sources.
Keen to stifle China's AI and technological development, the U.S. has since 2022 placed restrictions on exports to China of high-end chips.
Last year, Trump banned and then allowed exports of a much weaker chip, the H20. But then Beijing de facto blocked those sales from around August, prompting Nvidia CEO Jensen Huang to say the company's share of the AI chip market in the world's second-largest economy had shrunk to zero.
The H200, however, delivers roughly six times the performance of the H20, making it a highly attractive product.
While Chinese chipmakers have developed AI processors like Huawei's HWT.UL Ascend 910C, the H200 is considered far more efficient for the large-scale training of advanced AI models.
Chinese technology companies have placed orders for more than two million H200 chips priced at around $27,000 each, far exceeding Nvidia's inventory of 700,000 chips, sources said last month.
Conditions placed by the U.S. on the H200 exports include a cap limiting China to no more than 50% of the total chips sold to U.S. customers.