Chinese companies have been forced to use less-powerful domestic alternatives as the US has enforced strict export controls on its AI chips – fearful Beijing could use the tech in military applications or to edge ahead in the AI race.

But now that it appears those export curbs could be lifted, Chinese regulators are discussing ways to allow only limited access to the chips as it encourages domestic production, two people with knowledge of the matter told the Financial Times.

President Trump and Chinese leader Xi Jinping at a bilateral meeting in South Korea in late October. White House/News Pictures/Shutterstock

Buyers would likely be required to go through a tedious approval process, including submitting requests to purchase the Nvidia chips and filing an explanation as to why domestic producers are unable to meet their needs, the sources said.

A final decision on the matter has not yet been made, according to the report.

In a Truth Social post on Monday, Trump announced the US “will allow NVIDIA to ship its H200 products to approved customers in China,” and that “25% will be paid” to the US.

He said the Commerce Department is working on the final details, and the same export approach will be applied to other American chipmakers like AMD and Intel.

The White House and Chinese Embassy did not immediately respond to The Post’s requests for comment.

Exports of Nvidia’s H200 chips – its second-best generation of AI chips – were initially banned under the Biden administration over national security concerns.

Nvidia CEO Jensen Huang has been lobbying for the export curbs to be lifted. 

Those who support the resurgence of exports have argued it has the potential to make China reliant on American technology. 

Nvidia CEO Jensen Huang has been lobbying for the export curbs to be lifted.  AFP via Getty Images

Meanwhile, Beijing has been urging domestic producers to step up their game and create chips that can replace American counterparts like the H200.

But Chinese tech giants like Alibaba, ByteDance and Tencent are eager to resume imports of Nvidia GPUs.

As Beijing discourages companies from using American tech, it has ramped up its customs checks of chip imports and offered energy subsidies to AI data centers.

The two regulators in charge of this independent chipmaking campaign could ultimately ban the public sector from buying H200 chips, sources told the Financial Times.

While Trump announced that exports would resume, he does face some obstacles at home – including a group of US senators who introduced legislation that would ban such a move for at least 30 months.

Nvidia has continued to export its H20 chip – a lower-performance variation – to China in the meantime. AFP via Getty Images

US lawmakers are also looking into adopting an approval process that would only allow the sale of H200 chips to companies it deems “safe,” sources told the Financial Times.

In the meantime, Nvidia has continued to export its H20 chip – a lower-performance variation – to China after it agreed in August to hand over 15% of revenues from such sales to the US government.

Beijing officials, however, have clamped down on access to these chips, arguing the lower-tier Nvidia product is no better than Chinese alternatives.

In a response to Trump’s Truth Social post, Chinese foreign ministry spokesperson Guo Jiakun said: “China has consistently advocated that China and the US achieve mutual benefit and win-win results through co-operation.”

US officials have been stepping up their enforcement efforts as smugglers attempt to bypass chip trade restrictions.

American authorities said Tuesday that they shut down yet another China-linked smuggling network that trafficked or attempted to traffic more than $160 million worth of Nvidia chips.

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The GPU, or graphics processing unit, will be part of Nvidia’s latest generation Blackwell-architecture AI processors and is expected to be priced between $6,500 and $8,000, well below the $10,000-$12,000 the H20 sold for, according to two of the sources.

The lower price reflects its weaker specifications and simpler manufacturing requirements.

The new AI chipset for China will be part of Nvidia’s latest generation Blackwell-architecture AI processors and is expected to be priced between $6,500 and $8,000, according to two of the sources. AFP via Getty Images

It will be based on Nvidia’s RTX Pro 6000D, a server-class graphics processor and will use conventional GDDR7 memory instead of more advanced high bandwidth memory, the two sources said.

They added it would not use Taiwan Semiconductor Manufacturing Co.’s advanced Chip-on-Wafer-on-Substrate, or CoWoS, packaging technology.

The new chip’s price, specifications and production timing have not previously been reported.

The three sources Reuters spoke to for this article declined to be identified as they were not authorized to speak to media.

An Nvidia spokesperson said the company was still evaluating its “limited” options. “Until we settle on a new product design and receive approval from the U.S. government, we are effectively foreclosed from China’s $50 billion data center market.”

TSMC declined to comment.

Nvidia CEO Jensen Huang said last week the company’s older Hopper architecture – which the H20 uses – cannot accommodate further modifications under current U.S. export restrictions. AFP via Getty Images

China remains a huge market for Nvidia, accounting for 13% of its sales in the past financial year. It’s the third time that Nvidia has had to tailor a GPU for the world’s second-largest economy after restrictions from U.S. authorities who are keen to stymie Chinese technological development.

After the U.S. effectively banned the H20 in April, Nvidia initially considered developing a downgraded version of the H20 for China, sources have said, but that plan didn’t work out.

Nvidia CEO Jensen Huang said last week the company’s older Hopper architecture – which the H20 uses – can no longer accommodate further modifications under current U.S. export restrictions.

Nvidia’s market share in China has plummeted to 50% currently from 95% before 2022, when U.S. export curbs that impacted its products began. REUTERS

Reuters was unable to determine the product’s final name.

Chinese brokerage GF Securities said in a note published on Tuesday that the new GPU would likely be called the 6000D or the B40, though it did not disclose pricing or cite sources for the information.

According to two of the sources, Nvidia is also developing another Blackwell-architecture chip for China that is set to begin production as early as September. Reuters was not immediately able to confirm specifications of that variant.

Nvidia’s market share in China has plummeted from 95% before 2022, when U.S. export curbs that impacted its products began, to 50% currently, Huang told reporters in Taipei this week. Its main competitor is Huawei HWT.UL which produces the Ascend 910B chip.

Huang also warned that if U.S. export curbs continue, more Chinese customers will buy Huawei’s chips.

The H20 ban forced Nvidia to write off $5.5 billion in inventory and Huang told the Stratechery podcast on Monday that the company also had to walk away from $15 billion in sales.

Huang has warned that more Chinese customers will buy Huawei’s chips if U.S. export curbs continue. AFP via Getty Images

The latest export restrictions introduced new limits on GPU memory bandwidth – a crucial metric measuring data transmission speeds between the main processor and memory chips. This capability is particularly important for AI workloads that require extensive data processing.

Investment bank Jefferies estimates that the new regulations cap memory bandwidth at 1.7-1.8 terabytes per second. That compares with the 4 terabytes per second that the H20 is capable of.

GF Securities forecast the new GPU will achieve approximately 1.7 terabytes per second using GDDR7 memory technology, just within the export control limits.

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The United States Postal Service announced Tuesday that it had temporarily stopped accepting packages from China and Hong Kong, hours after an order by President Trump took effect that ended duty-free handling of many smaller parcels.

Mr. Trump ordered on Saturday that all goods leaving China starting on Tuesday must follow the rules for higher-value shipments. Until the change, parcels worth up to $800 apiece were not required to include detailed information on their contents and were not subject to tariffs.

The United States imports close to four million of such lower-value parcels a day with little or no customs inspection and no duties collected — with most of them coming from China.

The Trump administration and other critics have contended that allowing these packages into the United States has created a conduit for fentanyl, a synthetic opioid, and related supplies to enter the United States.

But the duty-free provision on lower-value parcels, known as the de minimis rule, has also been used by many e-commerce companies to bring regular consumer items from China into the United States without paying tariffs on them.

FedEx and UPS are also affected by the change in customs rules, as they move a large portion of the parcels, running frequent cargo flights from China to the United States. Neither company has responded yet to questions about how they will handle the new rules.

The de minimis provision was included in a broader order by Mr. Trump that imposed an extra 10 percent tariff on all imports from China.

Lower-value parcels from China, which previously were tariff-free, now face not only the 10 percent tariff but also the many complex tariffs on every category of goods that these shipments previously skirted entirely.

A spokeswoman for the U.S. Postal Service did not respond to a question about whether stoppages were related to the change in trade rules, referring to a statement the service had released announcing the suspension.

Customs and Border Protection, which is responsible for inspecting imports and assessing tariffs, did not immediately respond to a request for comment. The White House did not immediately provide comment. Trade lawyers said the postal stoppage was caused by the executive order.

The rapid rollout of Mr. Trump’s trade orders left little time for postal and customs officials to prepare to scrutinize so many packages. Mr. Trump said on Jan. 22 that he would put tariffs on Canada and Mexico on Feb. 1.

He added China to the list on Jan. 23, but did not say then that he would include a ban on duty-free handling of shipments under $800 from any of the three countries. He signed the executive orders on Feb. 1, including the de minimis ban for all three countries, to take effect just three days later. On Monday, he suspended on Monday the orders on Canada and Mexico, but left in place the tariffs and de minimis rule on China.

Supporters of de minimis have long said that eliminating the provision would increase the burden on U.S. customs officials. U.S. Customs and Border Protection is also the primary agency responsible for carrying out much of Mr. Trump’s enforcement actions at the border.

In an online event in October, Ralph Carter, the vice president of regulatory affairs at FedEx, observed that resources were stretched for U.S. customs officials and that a change to de minimis rules could lead to bottlenecks for shippers.

“If we convert these millions of shipments from de minimis into formal, informal clearances, we’re going to have serious supply chain backups, because there simply isn’t the resources to manage that,” he said. “And so that’s going to affect all importers, not just importers of de minimis.”

Neil Saunders, managing director at GlobalData Retail, a research and consulting firm, said that the decision to stop international packages coming from China and Hong Kong would have its greatest impact on marketplaces like Shein, Temu and to some extent Amazon.

“They are the ones putting millions of packages into the system each week,” Mr. Saunders said in an interview. “That route has now been cut off at least temporarily.”

Shein and Temu are two of the largest e-commerce companies that connect low-cost Chinese factories to millions of American households. Shein declined on Tuesday to comment on the new rules on small packages, while Temu has not yet responded to questions sent on Monday. Amazon also did not immediately respond to a request for comment.

Raising the duty-free minimum has allowed millions of American households to buy low-cost goods from China. But U.S. manufacturers in sectors like textiles and apparel have contended that the imports of small parcels have undermined their ability to stay in business.

The rapid expansion of e-commerce has for years posed a dilemma for Customs and Border Protection. Customs officials were already starting to be overwhelmed by small e-commerce parcels in 2016, when they persuaded Congress and the Obama administration to raise the minimum value for customs inspection and tariff collection to $800, from $200.

But with the increase in the duty-free limit, the number of duty-free parcels has risen tenfold since 2016. Congress has been debating for the past year how to change the rule on duty-free parcels.

Proposals in Congress had tended to focus on matching the policies of China, which discourages de minimis imports. China restricts de minimis imports to a few kinds of products, closely checks what is imported and sets very low limits on the value of each parcel — for many products, less than $100.

The end of the American de minimis rule for goods from China could particularly complicate American imports of clothing. American law bars the import of any goods produced with forced labor in Xinjiang, a region of northwest China where Beijing has ordered a far-reaching crackdown on Uyghurs and other predominantly Muslim minorities.

The legislation requires importers to prove that goods with any content from Xinjiang did not involve forced labor — a hard legal standard to meet because China does not allow independent labor inspections there. And Xinjiang produces much of China’s cotton.

The de minimis imports skirted those rules. The suspension of de minimis rules may make it harder for companies to ship such goods from China.

Traditional retailers with stores, like Gap, ship their merchandise in bulk from overseas and pay tariffs on it, and already need to comply with legislation against forced labor. So they may be affected much less by the rule change than e-commerce companies.

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