China has reportedly granted conditional approval for one of the country’s leading AI startup, DeepSeek, to purchase Nvidia’s high-performance H200 chips. According to a report by news agency Reuters, the conditions, however, are yet to be finalised by China’s state planner, the National Development and Reform Commission (NDRC). The move comes almost exactly a year after the startup triggered a $600 billion wipeout of Nvidia’s market value.Citing sources familiar with the matter, Reuters said that Beijing has greenlit DeepSeek, alongside tech giants ByteDance, Alibaba, and Tencent, to acquire the H200, which is Nvidia’s second most powerful AI processor.
Nvidia’s ‘Deep’Seek irony
Notably, on January 27, 2025, shares of Nvidia plunged nearly 17% in a single day, reportedly the largest market cap loss in US history, after DeepSeek released its R1 model. The main reason for the decline was the Chinese company’s claim that high-level AI could be trained at a fraction of the cost using far fewer chips. This led investors to fear a collapse in demand for Nvidia’s high-end silicon.Not only Nvidia, shares of other AI companies like OpenAI – that have been spending billions to train their AI models – were also hit. One year later, DeepSeek is now transitioning from a perceived threat to a massive customer. The timing of the development is also critical as DeepSeek is expected to launch its next-generation V4 model in mid-February. It is said to have strong coding capabilities.
After US export clearance, China has to green-light H200 imports
Earlier this month, the US government formally cleared the H200 for export to China, however, the final approval decision rests with Beijing. China is looking to balance the immediate compute needs of its tech sector by nurturing domestic chipmakers like Huawei.Previous reports have claimed that the NDRC is considering “bundling” requirements, which means Chinese tech companies will have to purchase a specific ratio of domestic AI accelerators for every Nvidia H200 they import. Recently, Nvidia CEO Jensen Huang, told reporters in Taipei that the company has not yet received official confirmation, noting, “I believe that China was still finalizing the license.”