China Grants Conditional Approval for DeepSeek to Import Nvidia H200 AI Chips
In a significant development for the global artificial intelligence sector, China has reportedly granted conditional approval for one of the country's leading AI startups, DeepSeek, to purchase Nvidia's high-performance H200 graphics processing units. According to a Reuters report citing sources familiar with the matter, the approval comes with specific conditions that are yet to be finalized by China's state planner, the National Development and Reform Commission.
From Market Disruptor to Major Customer
The approval represents a remarkable turnaround in the relationship between DeepSeek and Nvidia. Almost exactly one year ago, DeepSeek triggered a massive $600 billion wipeout of Nvidia's market value when it released its R1 model. On January 27, 2025, Nvidia shares plunged nearly 17% in a single day, reportedly the largest market capitalization loss in US history.
The primary reason for this dramatic decline was DeepSeek's claim that high-level artificial intelligence could be trained at a fraction of the cost using far fewer chips than previously believed. This announcement led investors to fear a potential collapse in demand for Nvidia's high-end silicon products, which had been driving the company's remarkable growth during the AI boom.
Notably, the market impact extended beyond Nvidia alone. Shares of other prominent AI companies, including OpenAI, which has been spending billions of dollars to train its sophisticated AI models, were also negatively affected by DeepSeek's announcement. The development highlighted how technological breakthroughs in AI training efficiency could disrupt established market dynamics.
Strategic Import Approval with Conditions
According to the Reuters report, Beijing has greenlit DeepSeek alongside Chinese tech giants ByteDance, Alibaba, and Tencent to acquire the H200 processors. The H200 represents Nvidia's second most powerful AI processor currently available on the market, offering significant performance improvements for artificial intelligence training and inference tasks.
The timing of this approval is particularly critical as DeepSeek is expected to launch its next-generation V4 model in mid-February. Industry sources indicate that this new model possesses strong coding capabilities that could further enhance its competitive position in the global AI landscape.
Balancing Domestic Development with Import Needs
Earlier this month, the United States government formally cleared the H200 for export to China, removing one significant barrier to the transaction. However, the final approval decision ultimately rested with Beijing, which has been carefully balancing the immediate computational needs of its technology sector with its strategic goal of nurturing domestic chipmakers.
China has been actively supporting homegrown semiconductor companies like Huawei, aiming to reduce its dependence on foreign technology while simultaneously ensuring that its AI companies have access to the computational resources necessary to remain competitive globally.
Previous reports have suggested that the National Development and Reform Commission is considering implementing "bundling" requirements as part of the approval conditions. This policy would require Chinese technology companies to purchase a specific ratio of domestic AI accelerators for every Nvidia H200 chip they import, thereby supporting local semiconductor manufacturers while still allowing access to advanced foreign technology.
Industry Response and Confirmation Status
Nvidia CEO Jensen Huang recently addressed the situation during remarks to reporters in Taipei, stating that the company has not yet received official confirmation of the approvals. Huang noted, "I believe that China was still finalizing the license," indicating that while progress has been made, the final details remain to be settled between the Chinese authorities and the companies involved.
The conditional approval represents a complex balancing act for Chinese regulators, who must navigate between supporting domestic technological development and ensuring that Chinese AI companies have access to the computational resources necessary to compete on the global stage. As the artificial intelligence race intensifies globally, access to advanced semiconductor technology remains a critical factor determining competitive advantage in this rapidly evolving field.
