DeepSeek, a Chinese artificial intelligence startup initially viewed as a competitive threat to Nvidia Corporation’s high-performance chips, is now reportedly preparing to purchase Nvidia’s advanced H200 AI processors. This change in stance was confirmed in a recent report citing sources familiar with the matter, noting that Chinese industry regulators have granted approval for DeepSeek to procure these chips, although some regulatory conditions remain under discussion.
Earlier this week, Chinese authorities authorized prominent technology companies, including ByteDance, Alibaba Group Holdings, and Tencent Holdings, to collectively acquire over 400,000 units of Nvidia’s H200 chips. The approvals stem from endorsements by China’s ministries overseeing industry and commerce, with the final regulatory framework pending confirmation from the National Development and Reform Commission, the country’s foremost economic planning agency.
The Nvidia H200 is recognized as the company’s second most potent AI chip, a flagship component integral to advanced artificial intelligence applications. It has emerged as a central issue within the broader context of U.S.-China technology relations, in which export controls and market access remain finely balanced. Although the United States authorized the export of these chips to China earlier this month, the ultimate decision on whether shipments proceed lies with Chinese regulators.
Notably, Nvidia’s CEO, Jensen Huang, mentioned recently in Taipei that his company has not received verified confirmation of these approvals as of that time. Nonetheless, DeepSeek’s position appears to have evolved from a potential rival hampering Nvidia’s chip demand to a consumer reliant on Nvidia’s cutting-edge technology.
DeepSeek made headlines in early 2025 after unveiling an economical AI model that purportedly matched the performance levels of leading American systems but at a fraction of the cost to develop. This initially sparked concerns in global markets about the possibility of reduced demand for Nvidia’s premium AI processors, which led to a significant decline in Nvidia’s stock value. However, these apprehensions now seem ill-founded given the recent developments.
If DeepSeek proceeds with purchasing the H200 chips, it would indicate a continued dependence on Nvidia’s state-of-the-art hardware, even as AI developers aim to improve efficiency in AI system performance. Industry observers, including Futurum Group’s CEO Daniel Newman, have publicly criticized suggestions that DeepSeek’s breakthroughs threaten Nvidia’s market position, emphasizing that DeepSeek is instead actively acquiring Nvidia’s top-tier hardware.
The sales of Nvidia chips to Chinese firms occur under intense geopolitical scrutiny. Reports have surfaced alleging that Nvidia-assisted AI models developed by DeepSeek have been utilized by the Chinese military, sparking congressional concerns within the United States. These factors contribute to the complex regulatory environment surrounding the transfer of high-tech components like the H200 chip.
Looking ahead, DeepSeek plans to release its next-generation AI model, known as V4, in mid-February, underscoring its continued momentum in AI research and development.
Concerning market activity, Nvidia shares closed at $191.13, reflecting a 0.72% decrease on Friday, followed by a slight after-hours decline to $190.20. Despite recent fluctuations, Nvidia maintains a strong Quality rating in stock evaluations, supported by positive price trends over short, medium, and long-term periods.
The developments concerning DeepSeek’s acquisition of Nvidia chips spotlight the intricate balance between technological progress, market dynamics, and geopolitical oversight affecting the AI and semiconductor industries.
Key Points
- DeepSeek, previously viewed as a competitor, now seeks to purchase Nvidia’s H200 AI chips under Chinese regulatory approval.
- China has also authorized major tech firms such as ByteDance, Alibaba, and Tencent to buy over 400,000 of the H200 processors collectively.
- The H200 chip is Nvidia’s second most powerful AI processor and plays a critical role amid U.S.-China technological tensions.
- DeepSeek’s chip purchases indicate continued dependence on Nvidia hardware despite earlier fears of declining high-end chip demand.
Risks and Uncertainties
- Final regulatory conditions from the National Development and Reform Commission are still being finalized, potentially affecting shipment approvals.
- Ongoing geopolitical tensions and scrutiny over the military applications of Nvidia-assisted AI models may influence future trade and regulatory decisions.
- Nvidia’s CEO has not yet confirmed receipt of approval notices, adding uncertainty to the timeline and scope of chip deliveries.
- Market reactions to such geopolitical and regulatory developments continue to pose volatility risks for Nvidia’s stock performance.