Nvidia H200 Blocked in China, AI Firms Pivot to Local Chips

- Chinese companies face supply issues with Nvidia's H200 GPUs, crucial for AI development. - Domestic alternatives gain traction as firms adapt to restrictions and market shifts. On January 22, 2026, the *South China Morning Post* reported that Chinese artificial intelligence firms are struggling to acquire Nvidia's H200 graphics processing units (GPUs), which are essential for AI advancements. According to the report, Chinese customs restrictions have delayed or blocked imports of these GPUs, even though the U.S. government approved them for export. These delays have effectively halted shipments, compelling Chinese companies to adjust their strategies. Reports indicate that Chinese customs officials have received instructions to obstruct imports of Nvidia's H200 GPUs. This action has created uncertainty for suppliers, who have since paused production. As a result, prices for H200 servers on the black market have soared, with current rates approximately 50% higher than their usual pricing. To adapt, Chinese AI firms are turning to domestic alternatives from manufacturers such as Huawei and Moore Threads. Although these local chips are not yet as advanced as the H200 for specialized applications, companies find them increasingly viable for tasks like AI inference. This shift aligns with Beijing's broader strategy to prioritize high-performance domestic chips, as the government aims to advance self-reliance, reduce dependency on foreign technology, and reinforce China’s tech sovereignty. Meanwhile, China is leveraging its extensive infrastructure and energy resources to counteract some of the hardware supply challenges. At the World Economic Forum, officials emphasized the nation’s "infrastructure first" approach, a policy that promotes the use of affordable and reliable electricity to power massive data centers. Many of these facilities also integrate renewable energy initiatives, aligning sustainability with the country’s ambition to lead in AI innovation. The current GPU supply chain disruptions present both challenges and opportunities for China's AI sector. Firms are pivoting to meet evolving market realities, while the government places domestic innovation and infrastructure development at the forefront of its long-term strategy for AI growth.