China is preparing to ease its self-imposed restrictions on Nvidia's advanced AI processors, planning to let the country's top artificial intelligence companies buy a limited number of H200 chips, according to a report from The Information published Wednesday. The move marks a notable shift in Beijing's approach to foreign AI hardware after months of pushing domestic firms toward homegrown alternatives.

Who's Getting Access

Chinese officials have informed companies including Alibaba Group Holding, ByteDance, and DeepSeek in recent weeks that they will have permission to purchase some of the H200 processors, which are used to train and develop AI models. Companies seeking approval will reportedly need to specify how many chips they need and justify why, as part of the government's review process.

How Big a Shift This Really Is

The backstory here involves layers of both U.S. export policy and Chinese domestic policy. On the American side, the U.S. government has already permitted Nvidia to sell its H200 chips to China and had licensed roughly 10 Chinese firms to buy them — the H200 was specifically designed by Nvidia to comply with U.S. export control thresholds following earlier restrictions on the more powerful A100 and H100 chips. The real obstacle, however, has come from Beijing itself: Chinese regulators had maintained an effective ban on domestic firms buying even export-compliant Nvidia hardware, in an effort to force local companies to rely on and help build up China's homegrown chip supply chain.

That self-reliance push has run into a hard wall. Chinese AI companies are reportedly facing a severe computing capacity crunch that domestic chipmakers simply cannot resolve fast enough to keep pace with the demands of training next-generation AI models — a shortage that appears to be the driving force behind Beijing's reconsideration.

Strings Attached

The policy shift is not expected to be an open floodgate. According to the report, China is considering approving fewer than 200,000 H200 chips in total — less than half of what companies had reportedly requested earlier this year. Beijing is also said to be placing use restrictions on the chips: companies receiving approval would reportedly be allowed to use the H200s only for AI training, while being directed to prioritize domestically developed processors for inference workloads. Firms have also reportedly been told to use the chips only for processing public data, not sensitive customer information — a restriction that suggests continued government wariness about foreign hardware handling critical domestic data.

Market Reaction

Nvidia shares rose in Wednesday trading following the report, with the stock among the most actively discussed on retail trading platforms that morning. Alibaba shares also moved higher on the news. Investors have been closely watching for any signs of a genuine thaw in China's stance toward U.S. AI hardware, given how central chip access has become to the broader U.S.-China tech rivalry.

Why It Matters

If confirmed and implemented, the policy would offset a chip shortage in China that has been driven by soaring global demand for AI infrastructure, giving major players like Alibaba, ByteDance, and DeepSeek a path to scale up training capacity even as Beijing continues to publicly champion self-sufficiency in semiconductors. It also underscores the delicate balancing act China is walking: leaning on foreign technology to stay competitive in the near term while trying not to undercut the long-term buildup of its own chip industry. Whether this remains a narrow, tightly capped exception or evolves into a broader loosening of restrictions will likely depend on how quickly domestic Chinese chipmakers can close the performance gap with Nvidia's offerings.