Beijing allows Chinese tech giants to buy Nvidia H200 chips—with strict limits

China's decision to lift its blockade on Nvidia H200 sales, after a period of near-zero revenue, reflects mounting pressure from its tech sector facing an acute computing shortage. The approval directly addresses a critical bottleneck: firms like Alibaba and ByteDance require cutting-edge processors to develop next-generation AI models competitively. However, Beijing has engineered the opening to serve domestic industrial policy—by capping supply at fewer than 200,000 units (less than half the original request) and mandating that inference workloads depend on homegrown alternatives like Huawei processors, regulators are preserving space for local chip makers to capture the inference market while tolerating foreign hardware only for the most complex training tasks.

This dual-track approach allows China to ease immediate pressure without surrendering long-term self-sufficiency goals. For Nvidia, the conditional reopening is a major strategic win—it restores access to a market that had shrunk to near-zero and signals a thaw in Washington-Beijing tensions over semiconductor export controls. For Chinese tech companies, the allocation is a partial relief, though the capped number falls well short of their stated needs, suggesting continued constraints on their AI development capacity.