HONG KONG: Around 600,000 of Nvidia's advanced artificial intelligence chips are being held in Hong Kong as they await shipment to mainland China, with Beijing withholding approval for large-scale imports despite strong demand from Chinese technology companies, according to two people familiar with the matter.

The previously unreported stockpile of H200 processors highlights China's reluctance to deepen its dependence on American technology, even as domestic companies seek more powerful chips to develop AI models and meet growing demand.

China has permitted limited shipments of H200 chips into the country in recent months, three people familiar with the matter said. Several major Chinese internet companies have each obtained approximately 10,000 chips over the past few months, according to one source.

Three people also said small quantities had entered China through intermediaries and indirect shipping routes, although they did not specify the volumes involved.

Beijing has yet to authorise large-scale imports, leaving substantial quantities of the processors awaiting clearance.

China's Ministry of Industry and Information Technology and the National Development and Reform Commission did not respond to requests for comment. Nvidia and Chinese technology companies Alibaba, ByteDance, DeepSeek and Tencent also did not respond.

Although the H200 is not Nvidia's newest AI processor, it offers capabilities that Chinese alternatives have yet to match. Combined with Nvidia's software, the chip is particularly useful for training advanced AI models.

The United States has imposed export restrictions on advanced Nvidia processors and semiconductor manufacturing equipment since 2022, seeking to limit China's access to cutting-edge computing technology.

Constraints on authorised supplies have encouraged Chinese buyers to turn to intermediaries and unofficial channels, driving up prices.

By the end of October, an eight-card H200 server was being offered in mainland China for more than 6 million yuan ($900,000), approximately three times its price a year earlier, according to a person familiar with the matter.

Servers equipped with Nvidia's newer Blackwell processors, which remain subject to US export controls, were being offered for more than 20 million yuan each, the source said.

The H200 has become a point of contention in broader trade and technology tensions between Washington and Beijing.

The United States initially prohibited exports of the processor to China before President Donald Trump's administration granted Nvidia permission last year to sell it to approved Chinese customers following bilateral trade negotiations.

However, Beijing subsequently introduced its own restrictions on H200 imports, reflecting concerns about relying too heavily on American technology.

Technology publication The Information reported in July that Chinese authorities had informed companies including Alibaba, ByteDance and DeepSeek that they could receive approval to purchase limited quantities of H200 processors for AI model training.

According to that report, total approvals could cover fewer than 200,000 chips, with Beijing encouraging companies to prioritise domestically produced processors for inference, the process of running AI models.

Reuters reported last month that ByteDance, Alibaba and Tencent had ordered more than 3 million Nvidia RTX Pro 5500 graphics cards, a less powerful product compliant with US export restrictions.

Those orders carried a combined sticker price exceeding $35 billion, underscoring the substantial demand for advanced computing hardware among China's leading technology companies.