Suppliers for parts of tech major Nvidia's H200 chips have paused production after custom officials blocked entry of the AI processor's shipments into China, the Financial Times reported, citing sources.
One source told FT that Nvidia has been “caught by surprise” by the development as its early shipments arrived in Hong Kong this week.
The report added that they reached out to China’s General Administration of Customs and Nvidia for statements but did not receive immediate responses to queries.
Nvidia's suppliers in a fix: Some parts cannot be use for other products
Notably, the United States just last December approved Nvidia's sale of the artificial intelligence processors in China. However, parts makers of essential components are now concerned that it is the Chinese authorities who will block shipments and want to write-offs later down the line, the report said two sources informed.
Chu Wei-Chia, analyst at SemiAnalysis told FT that the printed circuit boards made for H200 chips are specially designed and cannot be reused in other products, sparking concerns over excess production.
Nvidia estimated 1 million orders from Chinese clients, to feel hit
Notably, Nvidia CEO Jensen Huang has been gung-ho about the Chinese market and had lobbied hard with Washington and Beijing to get his H200 chips approved for sale. After US President Donald Trump in December signaled that he would relent, the company pumped up production for estimated over 1 million orders from Chinese clients, the source told FT.
The deliveries were planned for March, but now the fate remains suspended amid uncertainty from customs officials, the source added.
Chinese custom authorities block Nvidia's H200 chip: What happened?
It further reported that Chinese customs authorities this week told a logistics company in Shenzhen that Nvidia's H200 chips are not allowed into country. There was no reason given for the block, nor indication of whether this is a temporary step or permanent ban, the source added.
Sources said that domestic technology companies have been warned against buying Nvidia chips and told to prioritise domestic options instead.
The report added that authorities are debating limited access to H200 chips for use by tech giants like Tencent, Alibaba and ByteDance for projects that require higher performance and easier maintenance.
Besides the suppliers, even Chinese clients are rethinking their H200 purchase amid the uncertainty. One supplier told FT that orders for Nvidia's H200 chip have been cancelled and has instead spawned a black market for its banned but more advanced B200 and B300 chips instead.
