China Orders Tech Giants to Prepare Nvidia H200 Buys
Beijing grants preliminary approval for Alibaba, Tencent, and ByteDance to purchase advanced AI chips. More than 2 million units already on order.
China is moving from approval to action on Nvidia chip imports.
Beijing has directed its major technology companies to prepare orders for Nvidia's H200 artificial intelligence chips, according to Bloomberg. Alibaba, Tencent, and ByteDance have received preliminary approval to proceed with purchases, marking a significant shift from the regulatory uncertainty that defined the past year.
This follows the formal U.S. export approval earlier this month. The pieces are now in place for what could be Nvidia's largest international sales opportunity since AI demand exploded in 2023.
The Numbers Are Staggering
Chinese companies have already placed orders for more than 2 million H200 chips at roughly $27,000 each.
That's approximately $54 billion in potential revenue. But there's a supply problem—Nvidia's current inventory sits at only 700,000 units. The remaining 1.3 million chips will need to come from new TSMC production runs, which take more than three months to complete.
First deliveries are expected before the Lunar New Year in mid-February from existing stock. Additional shipments won't arrive until Q2 at the earliest. For context, Nvidia generated $35 billion in data center revenue last quarter. These China orders represent a massive revenue windfall once production catches up.
Strings Attached
Beijing isn't giving its tech giants a blank check.
Reports indicate China will require H200 purchasers to also buy domestic AI chips from Huawei and Cambricon as a condition of approval. The ratio hasn't been finalized, but the intent is clear: Beijing wants to support its indigenous chip industry while accessing Nvidia's superior technology.
From China's perspective, this is hedged dependency. Use Nvidia for current AI deployments while funding domestic alternatives that could reduce reliance over time. The policy mirrors China's approach to other critical technologies—participate in global supply chains while building backup capabilities.
For Nvidia, the bundling requirement is a minor nuisance at current volumes. The company's margin structure can absorb whatever share shift occurs. What matters is getting chips into Chinese data centers.
Usage Restrictions
Not all buyers are welcome.
China has agreed to prohibit H200 use by government agencies, military applications, critical infrastructure, and state-owned enterprises. These restrictions mirror the conditions the Trump administration attached to the export approval earlier this month.
The enforcement mechanism remains unclear. Once chips enter China, tracking their ultimate deployment is difficult. U.S. officials acknowledge this, but argue that allowing sales through legitimate channels is preferable to watching Chinese companies seek alternatives through gray markets or accelerate domestic development.
Why Now?
The timing aligns with several factors.
The U.S. Bureau of Industry and Security changed its review policy on January 15, shifting H200 exports from "presumption of denial" to "case-by-case review." That regulatory signal opened the door for Beijing to coordinate purchases.
Meanwhile, AI competition between U.S. and Chinese tech giants has intensified. Alibaba, Tencent, and ByteDance are all building large language models and AI infrastructure that require massive compute capacity. Falling behind Nvidia customers in the U.S. and Europe isn't an option.
The upcoming earnings reports from Microsoft and Meta will reveal how much Western hyperscalers are spending on AI infrastructure. Chinese equivalents face the same pressure to invest—or risk becoming uncompetitive in the global AI race.
Nvidia's Position
Shares have held steady near all-time highs as China news unfolds.
The stock gained 1.5% Friday despite broader semiconductor weakness triggered by Intel's collapse. Nvidia trades at a premium to peers, but the China opportunity provides upside that isn't fully reflected in analyst models.
Wall Street's consensus revenue estimate for fiscal 2027 doesn't include the full $54 billion China pipeline. If even half those orders convert to shipments this year, Nvidia is set for another earnings beat cycle.
The risk is political. Export rules can change with little warning. The Trump administration approved H200 sales, but tariff threats on European allies over Greenland show policy volatility hasn't disappeared. A Sino-American flare-up could freeze shipments mid-stream.
For now, though, the green lights are on. Nvidia is hiring to meet demand, TSMC is ramping capacity, and China's biggest tech companies are preparing to spend billions on American chips.