China's AI Chip Purchase Limits: A New Era of Tech Control
Beijing is preparing regulations to limit the quantity of advanced AI chips that domestic companies can purchase from foreign suppliers like Nvidia, Nikkei Asia reported on January 15, 2026, as China moves to balance access to cutting-edge technology with its push for semiconductor self-sufficiency.
The development comes amid a whiplash of U.S.-China policy signals this week. Just days after the Trump administration formally approved conditional exports of Nvidia's H200 chips to China on Tuesday, Chinese customs officials instructed agents that the chips are not permitted to enter the country, according to Reuters. Government officials also summoned domestic technology companies to meetings where they were explicitly told not to purchase the chips unless absolutely necessary.
Beijing's Balancing Act
Rather than imposing an outright ban, China's draft regulations would cap the total number of advanced foreign AI chips that companies can acquire, according to two sources cited by Nikkei Asia. The approach reflects Beijing's effort to manage the flow of foreign technology while still allowing access to processors essential for AI development.
Initial approvals for limited quantities of H200 chips could come as soon as the end of January, with companies required to justify their need, the report said. Beijing has also been holding regular meetings with leading tech firms to assess foreign chip usage and promote domestic alternatives.
Analysts suggest China may be positioning itself for leverage in upcoming diplomatic negotiations. President Trump is scheduled to visit Beijing in April to meet with Xi Jinping, and Iva Gjon, a geopolitical strategist at Rhodium Group, noted that Beijing appears to be "trying to determine what larger concessions they can obtain to dismantle U.S.-led technology restrictions".
U.S. Approval Draws Criticism
The Commerce Department's Tuesday ruling allows H200 exports to China under strict conditions: chips must undergo third-party testing in the U.S. before shipment, exports cannot exceed 50 percent of total volumes shipped to American customers, and Chinese buyers must demonstrate security procedures prohibiting military use.
The White House also imposed a 25 percent tariff on H200 chips, effective January 15, formalizing the government's cut of the sales. The levy applies to chips produced outside the U.S. that transit through American ports before being exported.
U.S. lawmakers and former officials sharply criticized the approval. Matt Pottinger, a former senior White House advisor on Asia during Trump's first term, told a congressional hearing the administration is heading in the "wrong direction" on AI, warning that selling H200s to China "will accelerate Beijing's military enhancement". Republican Representative Michael McCaul added, "You cannot sell military-grade AI technology to China".
Market Caught in Crossfire
NVIDIA shares fell in early Thursday trading following the Reuters report on customs restrictions. The Chinese market could generate substantial revenue for Nvidia, with reports indicating Chinese tech firms have ordered over two million H200 chips at roughly $27,000 each.
CEO Jensen Huang said last week that Chinese customer interest in the chips remains "very high" and that production has restarted. However, the competing policy signals from Washington and Beijing have left the path forward uncertain, with traders now watching for clarity from both governments ahead of Nvidia's scheduled February 25 earnings report.
