Nvidia (NVDA) Stock: DeepSeek Wins Battle for H200 Chips as China Opens Door

TLDR

• China conditionally approved DeepSeek to purchase Nvidia’s H200 AI chips, with final regulatory terms still being finalized by the National Development and Reform Commission
• ByteDance, Alibaba, and Tencent also received approval to buy over 400,000 H200 chips combined, though specific conditions remain undetermined
• Nvidia CEO Jensen Huang stated his company hasn’t received official notification and believes China is still finalizing licenses
• U.S. lawmakers raised concerns about Nvidia potentially helping DeepSeek develop AI models that could be used by China’s military, which Nvidia denied
• The H200 chip has become a flashpoint in U.S.-China relations, with Beijing controlling final import decisions despite U.S. export approval

China gave its leading AI startup DeepSeek conditional approval to buy Nvidia’s H200 artificial intelligence chips. Sources familiar with the matter told Reuters the regulatory conditions are still being worked out.

NVIDIA Corporation, NVDA

The approval comes as China’s industry and commerce ministries granted permissions to four major tech companies. DeepSeek joins ByteDance, Alibaba, and Tencent in receiving the green light to purchase H200 chips.

Reuters reported earlier this week that the three other companies secured approval to buy more than 400,000 H200 chips total. All four approvals come with conditions that China’s National Development and Reform Commission is still finalizing.

Nvidia CEO Jensen Huang said his company hasn’t received official notification about the approvals. Speaking to reporters in Taipei on Thursday, Huang said he believes China is still working through the licensing process. Nvidia declined to comment on DeepSeek’s specific approval.

The H200 represents Nvidia’s second most powerful AI chip. It’s become a major point of tension in U.S.-China tech relations.

Chinese firms want the chips badly. The U.S. approved exports earlier this month. But Beijing’s slow approval of imports has blocked shipments from moving forward.

Regulatory Hurdles and Political Concerns

Chinese authorities hold the final say on whether the chips can actually enter the country. The back-and-forth has created uncertainty for Nvidia’s potential China revenue.

If China allows the imports, Nvidia could see a substantial boost in sales. Demand for the H200 is strong among Chinese tech companies looking to build advanced AI systems.

DeepSeek shook the global tech sector last year by rolling out AI models that cost a fraction of those developed by U.S. rivals like OpenAI. The company is expected to launch its next-generation V4 model with strong coding capabilities in mid-February.

Any H200 purchases by DeepSeek could face scrutiny from U.S. lawmakers. A senior Congress member alleged Wednesday that Nvidia helped DeepSeek develop AI models later used by China’s military.

The lawmaker sent a letter to U.S. Commerce Secretary Howard Lutnick making the claims. Nvidia denied all allegations.

Market Reaction and What’s Next

Nvidia stock fell 0.71% in pre-market trading Friday as investors digested the news. The market appears to be waiting for clarity on the exact terms and how the deal will benefit Nvidia’s bottom line.

Analysts maintain a Strong Buy rating on Nvidia stock. Out of 40 recent analyst ratings, 38 are Buys, one is Hold, and one is Sell. The average price target of $262.79 suggests 36.51% upside potential.

The approvals mark progress in Nvidia’s efforts to tap the Chinese AI market. But political tensions between Washington and Beijing continue to create roadblocks.

DeepSeek declined to comment on the approval. China’s Ministry of Industry and Information Technology, Ministry of Commerce, and NDRC also didn’t respond to requests for comment.

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