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 Trump administration on Tuesday added 80 companies and organizations to a list of companies that are barred from buying American technology and other exports because of national security concerns.

The move, which targeted primarily Chinese firms, cracks down on companies that have been big buyers of American chips from Nvidia, Intel and AMD. It also closed loopholes that Trump administration officials have long criticized as allowing Chinese firms to continue to advance technologically despite U.S. restrictions.

One company added to the list, Nettrix Information Industry, was the focus of a 2024 investigation by The New York Times that showed how some Chinese executives had bypassed U.S. restrictions aimed at cutting China off from advanced chips to make artificial intelligence.

Nettrix, one of China’s largest makers of computer servers that are used to produce artificial intelligence, was started by a group of former executives from Sugon, a firm that provided advanced computing to the Chinese military and built a system the government used to surveil persecuted minorities in the western Xinjiang region.

In 2019, the United States added Sugon to its “entity list,” restricting exports over national security concerns. The Times investigation found that, six months later, the executives formed Nettrix, using Sugon’s technology and inheriting some of its customers. Times reporters also found that Nettrix’s owners shared a complex in eastern China with Sugon and other related companies.

After Sugon was singled out and restricted by the United States, its longtime partners — Nvidia, Intel and Microsoft — quickly formed ties with Nettrix, the investigation found.

Records obtained through WireScreen, a business intelligence platform, showed that Sugon and Nettrix have links to the Chinese Academy of Sciences, a vast research institution that develops chip technology, parts of which the United States has placed under sanctions for national security concerns. Procurement documents indicated that Nettrix had sold servers to universities that host defense laboratories and cybersecurity firms that work with the military and on China’s Great Firewall, among other customers.

The Trump administration added 54 companies and organizations from China to the entity list on Tuesday, as well as more than two dozen from Iran, Pakistan, South Africa, the United Arab Emirates and Taiwan.

The added entities had made contributions to Pakistani nuclear activities and its missile program, advanced China’s quantum technology capabilities and hypersonic weapons development, and tried to circumvent U.S. controls on Iran, among other actions, the administration said.

“We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” Howard Lutnick, the secretary of commerce, said in a statement.

The Trump administration also expanded its penalties on Tuesday to several subsidiaries of Inspur Group, which has been a significant customer of Intel and other U.S. technology firms. The administration said those entities had aided Inspur’s development of supercomputers that were used by the Chinese military, and had tried to acquire U.S. technology in support of that.

The Biden administration added Inspur’s parent company to the entity list in 2023, but after a brief pause, U.S. companies continued to do business with Inspur’s subsidiaries. Inspur Group moved its registered address to a location about a mile away from its parent group in 2023.

Trade experts have said the impact of U.S. entity listings can be easy for companies to dodge, because the entity listing is tied to a specific name and address.

Tuesday’s entity listings together will affect a significant portion of the Chinese market for servers, a type of computer that is necessary to generate artificial intelligence. The Trump administration also added a special designation to its restrictions to expand the penalties globally, which will stop companies from trying to bypass U.S. rules by exporting products to the Chinese firms from countries other than the United States.

The entity list was created under the Clinton administration to prevent adversaries from developing weapons of mass destruction, but presidents have wielded it increasingly aggressively over the past decade.

Other groups added to the list Tuesday included the Beijing Academy of Artificial Intelligence, which the administration said was added for trying to acquire A.I. models and chips in support of China’s military modernization.

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