SAN FRANCISCO, Jan 14 — The US Commerce Department on Tuesday opened the door for Nvidia to sell advanced artificial intelligence chips in China with restrictions, following through on a policy shift announced last month by President Donald Trump.

The change would permit Nvidia to sell its powerful H200 chip to Chinese buyers if certain conditions are met — including proof of “sufficient” US supply — while sales of its most advanced processors would still be blocked.

However, uncertainty has grown over how much demand there will be from Chinese companies, as Beijing has reportedly been encouraging tech companies to use homegrown chips.

Chinese officials have informed some firms they would only approve buying H200 chips under special circumstances, such as development labs or university research, news website The Information reported Tuesday, citing people with knowledge of the situation.

The Information had previously reported that Chinese officials were calling on companies there to pause H200 purchases while they deliberated requiring them to buy a certain ratio of AI chips made by Nvidia rivals in China.

In its official update on Tuesday, the US Commerce Department’s Bureau of Industry and Security said it had changed the licensing review policy for H200 and similar chips from a presumption of denial to handling applications case-by-case.

Trump announced in December an agreement with Chinese President Xi Jinping to allow Nvidia to export its H200 chips to China, with the US government getting a 25-per cent cut of sales.

The move marked a significant shift in US export policy for advanced AI chips, which Joe Biden’s administration had heavily restricted over national security concerns about Chinese military applications.

Democrats in Congress have criticized the move as a huge mistake that will help China’s military and economy.

Chinese chips 

Nvidia chief executive Jensen Huang has advocated for the company to be allowed to sell some of its more advanced chips in China, arguing the importance of AI systems around the world being built on US technology.

The chips — graphic processing units or GPUs — are used to train the AI models that are the bedrock of the generative AI revolution launched with the release of ChatGPT in 2022.

The GPU sector is dominated by Nvidia, now the world’s most valuable company thanks to frenzied global demand and optimism for AI.

H200s are roughly 18 months behind the US company’s most state-of-the-art offerings, which will still be off-limits to China.

Nvidia’s Huang has repeatedly warned that China is just “nanoseconds behind” the United States as it accelerates the development of domestically produced advanced chips.

On Wednesday, leading Chinese AI startup Zhipu said it had used homegrown Huawei chips to train its new image generator.

Zhipu AI described its tool as “the first state-of-the-art multimodal model to complete the entire training process on a domestically produced chip”.

The startup went public in Hong Kong last week and its shares have since soared 75 per cent — one of several dazzling recent initial public offerings by Chinese chip and generative AI companies, as high hopes for the sector outweigh concerns of a potential market crash. — AFP