China is preparing to permit some imports of Nvidia Corp (NASDAQ:NVDA, XETRA:NVD)’s H200 chips as soon as this quarter, according to a Bloomberg report citing people familiar with the matter, giving the US semiconductor company renewed access to a key market.
Chinese officials are expected to allow local companies to purchase the H200 for certain commercial applications, the sources said, speaking on the condition of anonymity.
The chip will remain restricted for use by the military, sensitive government agencies, critical infrastructure, and state-owned enterprises, citing security concerns. Requests from these organizations will be considered on a case-by-case basis.
The approach is similar to measures previously applied by Chinese regulators to foreign products, including devices from Apple and memory chips from Micron Technology.
Even with these limitations, the decision is seen as a significant development for Nvidia. China represents the world’s largest semiconductor market, and CEO Jensen Huang has projected that the AI chip segment alone could generate $50 billion in the coming years.
“If accurate, we see this news as a meaningful positive for NVDA given the size of the China market, with several prior news pieces talking to potentially needle-moving orders from Chinese customers,” Wedbush analysts wrote in a note.
“At the same time, we believe there may be a few other I's to be dotted and T's to be crossed (e.g. granting of required US export licenses) before parts ship again.”
Nvidia shares fell 1.7% to about $186 on Thursday morning.