On December 8, 2023, U.S. President Donald Trump announced that Nvidia would be permitted to sell its advanced H200 artificial intelligence processor to China, albeit with a 25% export tax. Despite this recent decision, an investigative report by Reuters reveals that the H200 chips have already infiltrated various sectors in China. Universities, research labs, and data centers have acquired these chips through gray-market channels well ahead of their official availability.
The report highlights that numerous Chinese institutions have integrated Nvidia’s second-most powerful AI chip into large-language models and advanced research projects. A professor at a university in Beijing openly acknowledged that his lab possesses eight H200 chips for AI model development. This public display of cutting-edge technology aids Chinese academic institutions in attracting top talent, creating a competitive landscape akin to an arms race among universities.
The pathways through which these chips transitioned from legal channels to the gray market remain uncertain. U.S. authorities have been tightening regulations on companies exporting American AI technology to China, reflecting a shift in policy. President Trump’s decision to allow the H200 sales marks a significant change from previous years, during which strict export controls were enforced on critical technologies. The U.S. administration appears to have shifted its approach, possibly adopting an “If you can’t beat ’em, join ’em” mentality in response to the reality of these chips already being present in China.
While the U.S. has not yet authorized the sale of Nvidia’s latest Blackwell chips, concerns about potential security risks are rising among lawmakers. There are indications that the H200 chips may have reached beyond academic and corporate domains, potentially impacting China’s military capabilities in AI applications.
As this situation unfolds, China has indicated plans to limit access to the imported H200 chips in favor of developing domestic technology. The market share for Nvidia in China has also seen a significant decline this year, prompting the company to reconsider its export strategies.
The long-term implications of these developments remain uncertain, with both the U.S. and China navigating a complex landscape of technological competition and cooperation. As the global tech community watches closely, the nuances of AI technology and its geopolitical ramifications will likely continue to evolve.
