Nvidia Suppliers Stop H200 Production After China Blocks Chip Deliveries: FT

• Nvidia expected more than 1 million H200 orders from Chinese clients, with suppliers operating continuously to prepare for March shipments
• Chinese government summoned domestic tech firms to warn them against purchasing the chips unless necessary, though no official explanation was given
• The H200 is Nvidia's second most powerful AI chip and a major flashpoint in U.S.-China relations, with uncertainty over whether Beijing seeks an outright ban to support domestic chipmakers or is using it as a bargaining tactic

Summary

Key Development:

Nvidia's suppliers have halted production of H200 AI chip components after Chinese customs officials blocked shipments from entering China. The H200 is Nvidia's second-most powerful AI processor and had recently received approval for the Chinese market.

Critical Figures:

• Nvidia expected over 1 million orders from Chinese clients
• Suppliers were operating around the clock to prepare shipments targeted for as early as March
• Chinese authorities issued directives this week instructing customs agents that H200 chips cannot enter the country

Market Context:

The H200 represents a major flashpoint in U.S.-China relations. Chinese government officials have reportedly summoned domestic tech firms, warning them against purchasing the chips unless necessary. Authorities have not provided official reasons for the restrictions or clarified whether this constitutes a formal ban or temporary measure.

Implications:

The situation creates significant uncertainty for Nvidia, which faces potential loss of substantial Chinese revenue. Three possible scenarios emerge: Beijing may seek an outright ban to support domestic chip manufacturers, may still be deliberating restrictions, or could use this as leverage in negotiations with Washington.

The production halt by suppliers indicates immediate supply chain disruption and suggests the measure's seriousness, despite lack of official clarification from Chinese authorities. This development adds to ongoing tensions over advanced semiconductor technology and could accelerate China's push for chip self-sufficiency while impacting Nvidia's growth projections in one of its key markets.