- China has refused to buy any H200 AI chips from Nvidia
- The move may be due to cost or security concerns
- It happens after a personal intervention by Donald Trump failed
Right now, there are two main players in the world of artificial intelligence (AI) hardware: Nvidia, which makes some of the best-performing AI chips, and China, which has a growing domestic industry that isn’t as dependent on Nvidia. US President Donald Trump has been trying to change that situation and help Nvidia penetrate the Chinese market, but it seems his latest efforts have backfired spectacularly – potentially ensuring Nvidia misses out on a $30 billion sale.
Last week, the US Commerce Department approved the sale of Nvidia’s H200 AI chip to ten Chinese firms, including names such as Alibaba and Tencent. That could have fetched Nvidia $15-20 billion at current prices, with financial analyst John Vinh saying Chinese demand is up to $30 billion, according to Moneywise.
Still, in a major blow to Trump and Nvidia CEO Jensen Huang, the Chinese government has refused to approve the purchase of chips from its domestic industry. Trump and Huang had traveled to a meeting with Chinese President Xi Jinping in an attempt to persuade him to allow the H200 sale to continue. Instead, they came away empty-handed, with Nvidia telling investors that their official market share in China is now effectively non-existent.
Speaking to reporters aboard Air Force One, Trump said of China: “They have a much higher level than the H200. China needs it, and yes, it came up. They choose not to buy because they want to develop their own. I think something can happen on that.”
In other words, China prefers to orient its AI industry around its own domestically manufactured chips rather than paying to use American imports. And it seems there are several reasons for that.
Ongoing computer chaos
One reason Chinese firms may not want to use American AI chips, such as those made by Nvidia, is that they would have to pay a significant fee for the privilege. Trump has managed to create an arrangement where the US government will levy a 25% tariff on every chip Nvidia sells to China, driving up the price for these overseas buyers.
But Beijing could be worried about something else. Since US law prohibits direct export fees, the chips must be routed through US territory before going to China. And that has raised fears in China that the chips could be tampered with — perhaps to install spyware, for example — before being shipped overseas. This has caused the Chinese government to turn inward and provide more support to its own domestic industry rather than foreign firms such as Nvidia.
What does it mean to you? Well, we might see Chinese AI models like DeepSeek getting more and more optimized for Chinese hardware. It was already happening before the latest move – DeepSeek’s V4 update, for example, was optimized for Huawei’s Ascend chips rather than Nvidia’s – but we could see more of this going forward. If you want to use these AI models, you may find yourself at a disadvantage when using a device equipped with a chip from Nvidia, AMD or Intel.
Beyond that, it shows that the ongoing computing chaos caused by the AI boom is still in full swing. With component prices skyrocketing and uncertainty about future sales for Nvidia – currently one of the world’s largest technology companies – it’s anyone’s guess what will happen next.
Follow TechRadar on Google News and add us as a preferred source to get our expert news, reviews and opinions in your feeds.
The best laptops for all budgets
