China Blocks Nvidia's AI Chips Despite U.S. Export Loophole

Chinese customs authorities have blocked shipments of Nvidia H200 artificial intelligence processors from entering the country. Suppliers of parts for the chips have paused production after the shipments were stopped. The action came even though the United States government has permitted the chips to be exported to China after they first pass through a laboratory for testing and face a 25 percent tariff. A report in the Financial Times said Nvidia had expected more than one million orders from Chinese clients. Suppliers had been operating around the clock to prepare for shipping as early as March. Reuters could not immediately verify the report, which cited two people with knowledge of the matter. Chinese customs authorities told agents that the H200 chips were not permitted to enter the country. Government officials also summoned domestic tech firms to warn them against buying the chips unless necessary. The sources spoke on condition of anonymity and said no reasons were given for the directives or whether the step was a formal ban or temporary measure. The H200 is Nvidia's second most powerful AI chip and one of the biggest flashpoints in relations between the United States and China. There is strong demand from Chinese firms, but it remains unclear if Beijing seeks to ban the chips to encourage domestic development or if the move is a bargaining tactic. The United States government is to take a share of profits from the exports under the arrangement. Experts and analysts are split on whether selling the H200 to China serves United States strategic interests.