H200 Exports to China
In a significant regulatory shift, the Bureau of Industry and Security (BIS) has released a final rule amending the Export Administration Regulations (EAR) to allow the export of Nvidia H200 GPUs to China.
This update marks a strategic pivot in how the U.S. manages the export of advanced semiconductors to China, moving from a "presumption of denial" to a "case-by-case review" for specific high-end computing commodities. The move is reflective of a view in the administration that to win the AI arms race, the US must outcompete China rather than necessarily restrict access to advanced technology outright.
What’s Changing?
The "presumption of denial" has long been the default for advanced computing exports to certain regions. Under this new rule, exporters can now apply for licenses for specific chips—such as the NVIDIA H200 or AMD MI325X—with the expectation of a case-by-case review, provided they meet strict criteria.
The rule includes technical parameters to define the chips and requires that they must have been commercially available in the US at the time the rule was published. This limits the scope to current generations of GPUs and excludes new GPUs. The rule also requires the export to certify that there is sufficient supply to satisfy US demand meaning that exports to China should not come at the expense of US availability.
Importantly, the rule also requires third party verification of GPU performance in the US by a US entity. Since shipments from third countries to China remain subject to the presumption of denial, all exports must originate from the US.
Security and KYC Requirements
A final important element of the rule is the need for strict controls to prevent unauthorized remote access and client Know Your Customer controls. The goal is to prevent military and other prohibited entities from accessing the compute capacity. Export controls have struggled to address the cloud compute and remote access issue, so these measures should help.
Nonetheless, its inclusion here leads to the question of why exports to other jurisdictions like the UAE should not also include such provisions to prevent Chinese military or strategic entities from accessing the compute service.
Takeaway
Overall, the rule will be seen as a boon for Nvidia, in particular, which until recently had marked down the potential for exports to China. The hope will be that by allowing China access to H200s, there may be less incentive for China to develop its own GPUs for AI model training. Still, the rule immediately leads to the question of whether such security and KYC measures should not also be applicable in other jurisdictions.
