The U.S. government signalled about two weeks ago that it is prepared to grant a licence allowing China’s ByteDance, owner of TikTok and one of the biggest AI players in China, to purchase Nvidia’s H200 chips.

Nvidia has been in talks over the terms attached to that licence for weeks, with negotiations far from concluded.

At the heart of the dispute is a Know Your Customer (KYC) requirement drafted by U.S. authorities. These rules are designed to ensure the chips don’t end up in the hands of China’s military or other unauthorised users.

Nvidia says it is acting as an intermediary between Washington and potential Chinese customers and insists it cannot unilaterally accept the conditions as they stand.

A spokesperson for Nvidia told Reuters: “We aren’t able to accept or reject license conditions on our own. Although KYC is important, KYC is not the issue. For American industry to make any sales, the conditions need to be commercially practical, else the market will continue to move to foreign alternatives.”

On the U.S. side, regulators have updated export rules to ease restrictions on H200 sales, a reversal of tougher curbs, but retained stringent safeguards, including detailed vetting of customers and usage.

Chinese firms, including ByteDance, Tencent and Alibaba, have already received preliminary Chinese regulatory approval to import the chips, though Beijing’s conditions are still being finalised.

The advanced H200 chip, a key component for large-scale AI training, has become a flashpoint in Washington’s broader technology rivalry with China.

For Nvidia and other U.S. chipmakers, including AMD and Intel, reopening China’s vast market promises significant revenue, but agreeing on terms that satisfy both commercial viability and national-security concerns remains a delicate balancing act.

Negotiations are ongoing, and a final breakthrough may depend on broader diplomatic engagement between Washington and Beijing in the coming months.

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