Reportedly, the suppliers for Nvidia’s recently sanctioned H200 AI processors have slowed down their manufacturing process due to the prohibition imposed by Chinese customs on the importation of these chips into China. As per the Financial Times, which was the first to report on the issue while citing two anonymous sources who are knowledgeable about the situation, Reuters has not yet confirmed the accuracy of the report through its own independent investigation. Nvidia did not provide any comment on the incident during its regular business hours when contacted.

The article mentions that Nvidia expected to receive more than one million orders placed by Chinese customers and thus, with the aid of suppliers who worked day and night, had increased the output to the extent that the first shipments were prepared to be dispatched as early as March. But, according to reports, the Chinese customs agents were informed that H200 chips would be a no-go for the country this week.

Moreover, the sources disclosed that the government had called the local tech companies and warned them not to buy the chips unless they had no other option. The government has not given any reason for the order, and it is still uncertain whether it is a ban or just a delay for limited time.

Nvidia’s second most potent AI chip, the H200, has become a principal argument in the debate between the US and China. Despite the high demand coming from the Chinese corporations, it is not clear what exactly Beijing’s reasons are. Some experts propose that the development of domestic chip technology might be the cause of the Trump’s administration support for the move which is pointed at, or it could simply be a case of bargaining in the ongoing geopolitical disputes.

The situation is further complicated by US policy. The Trump administration had approved exports of the US-designed, Taiwan-manufactured H200 chips to China. However, it also mandated that the chips be routed through a US laboratory for testing, enabling a 25% tariff to be imposed when the processors pass through the United States. This tariff also applies to AMD’s MI325X AI processor.

Opinions are divided on whether exporting the H200 to China is strategically beneficial. Supporters argue that providing access to the chip could slow China’s own AI chip development and maintain dependence on US technology. Critics, however, warn that the H200’s advanced capabilities could eventually be used in military applications that pose risks to US security and its allies.