Nvidia finally returns to the Chinese market, but there is a catch

Tension between China and Nvidia has been palpable for most of 2026. Although the Trump administration allowed Nvidia to export H200 chips to China, the country has in the meantime cracked down on Nvidia with heavy limits, likely to boost domestic chip production. Finally, after months of back and forth, Nvidia made the first shipment to China, but with one major problem: the hardware can go as far as Hong Kong, which technically still doesn’t fall under China’s customs border. Additionally, the processors can only be used in Hong Kong.

In August 2026, two companies, Tencent and ByteDance (the latter owning TikTok and CapCut), each received shipments of 10,000 H200 chips. This small amount is just the beginning, you could say. The United States has allowed Chinese companies to each acquire 100,000 of these processors, meaning that Nvidia, a company with almost zero market share in China, can finally expand into another market. It’s impossible to say how long the floodgates will remain open, as China remains adamant about keeping Nvidia’s best AI chip out of its continent, after all.

The rest of the world may be addicted to Nvidia, but Chinese companies are doing just fine without its chips. In fact, the lack of H200 stock has inspired a pretty innovative trend. For example, China has built a supercomputer called LineShine that runs entirely on CPUs, in stark contrast to other supercomputers that require GPUs to divide tasks into smaller cores. In fact, LineShine was the world’s first supercomputer to achieve speeds greater than 2 exaflops.

Data centers have also found a way to thrive. For example, Zhipu opened a 1 gigawatt AI data center running multiple computing clusters. More importantly, each cluster contains 10,000 chips, and surprise, surprise, there’s absolutely nothing from Nvidia. Although it is unclear which domestic chips Zhipu used, it has been speculated that they were either Huawei, Alibaba or Cambricon.

These examples are not monolithic. China’s domestic chip ecosystems are thriving. In the automotive industry, a robotics startup called Zelotesch deployed 25,000 vehicles and used only local chips. Same with BYD, an electric car maker with driver assistance systems running on its internal semiconductors. There are far too many stories like this that prove that China may not even need Nvidia in the long term. Can domestic chipmakers dethrone the tech giant? Impossible to predict, but if they continue on this path, the leadership in the AI ​​race could eventually shift to the East.