(Yicai) Dec. 10 -- The United States has granted conditional approval to Nvidia to sell its H200 chips, one of its most advanced products for training and running artificial intelligence, to China, but on the condition that 25 percent of each sale goes to the US government.

Nvidia can sell its H200 chips to "approved customers" in China and elsewhere, US President Donald Trump announced on Dec. 8. "The Department of Commerce is finalizing the details, and the same approach will apply to Advanced Micro Devices, Intel, and other great American Companies," he added.

The H200 is a high-end chip released by Nvidia in November 2023, with deliveries starting last year. It is specifically designed for training and inference generative AI models, running large-scale scientific computing, and processing massive amounts of data, with its performance several times better than that of the H20 chip, which was specifically designed for the Chinese market.

Selling H200 chips to commercial customers is a commendable move, Nvidia told Yicai.

Nvidia launched the H20 chip in 2023 after the US government banned the firm from selling its more advanced chips to China. The government expanded the ban to more products this April amid a trade spat between the two countries, but in July, Nvidia said it should resume sales of the H20 chips to China after the government assured the company that export licenses would be granted.

"The dynamics of this market, the innovation, dynamism, the space of this market, this industry is simply singular," Jensen Huang said in an interview with China Central Television in July. The country is an irreplaceable market despite ongoing trade tensions, he added,

"If we are not here, this market will be served by Chinese innovators, chip companies," Jensen noted. "Many cloud service providers will build their own chips. China's AI market will advance with or without Nvidia."

During the period when Nvidia was "absent" in China, the market underwent profound changes. Domestic AI chip makers, including Huawei Technologies, Moore Threads Technology, MetaX, Cambricon Technologies, and Hygon Information Technology, rapidly advanced.

However, according to Wu Wenchang, an analyst at Yicai, Chinese firms have succeeded in producing chips but have not been able to make them good enough. The capital expenditures of many big manufacturers were lower than expected in the first half of this year, mainly because they could not find sellers to buy chips from, Wu pointed out.

Tencent Holdings' graphics processing units are sufficient, with resources not extremely tight, the internet giant noted in its latest financial report.

A senior executive at Baidu recently said that the vast majority of inference tasks within the company are running on its Kunlun P800 chip. In addition, 360 Security Technology's founder Zhou Hongyi told Yicai that the firm has turned to domestic chips.

Editor: Martin Kadiev