Key Takeaways
- DeepSeek’s new V4 AI model relies predominantly on Huawei’s Ascend processors rather than Nvidia hardware.
- Zero H200 chips have been delivered to Chinese customers despite receiving US regulatory clearance.
- Delivery bottlenecks result from unresolved US-China negotiations over transaction conditions.
- The Chinese AI infrastructure sector represents a $50 billion opportunity expanding 50% year-over-year.
- Nvidia shares declined 1.41% Thursday, with a modest 0.8% recovery in Friday’s premarket session.
Nvidia encountered fresh obstacles in the Chinese market this week following DeepSeek’s V4 model debut — which predominantly utilized Huawei’s processors instead of Nvidia’s technology.
DeepSeek unveiled preview editions of V4 on Friday. Industry observers paid close attention to the release after the previous version disrupted markets last year with sophisticated features developed at an unexpectedly modest training expense.
Huawei seized the opportunity immediately. The Chinese technology powerhouse announced through WeChat that its complete Ascend AI processor portfolio now provides full compatibility with DeepSeek V4 models. While DeepSeek acknowledged testing one of V4’s critical optimization methods on both Nvidia GPUs and Huawei hardware — domestic chips clearly emerged as the preferred platform.
This development presents significant challenges for Nvidia, which has been shut out from China’s premium AI chip segment because of American export controls.
H200 Deliveries Frozen
CEO Jensen Huang announced last month that Nvidia had resumed production of H200 processors for possible Chinese distribution, noting that several clients had submitted purchase orders. However, Reuters disclosed this week that zero H200 units have actually been delivered to any Chinese purchaser.
The Trump administration officially greenlit H200 transactions with China, yet implementation has stalled. Conflicting positions between Washington and Beijing regarding specific sales parameters have postponed deliveries, Reuters sources indicate.
Chinese purchasers face additional hurdles obtaining authorization from their own regulatory authorities to complete acquisitions.
Financial Implications
The financial consequences are substantial. Huang has identified China’s AI infrastructure sector as valued at $50 billion annually with 50% year-over-year expansion.
KeyBanc analyst John Vinh projects that with unrestricted sales approval, Chinese enterprises would purchase approximately 1.5 million H200 processors throughout this year. Such volume would generate approximately $30 billion in Nvidia revenue.
Currently, that figure stands at absolute zero.
Nvidia shares retreated 1.41% Thursday, though they climbed 0.8% during Friday’s premarket trading before the Reuters disclosure about stalled H200 transactions emerged.
DeepSeek’s V4 introduction intensifies the pressure. Should Chinese AI innovators continue developing on Huawei’s Ascend ecosystem, Nvidia’s opportunity in that territory could contract even more — regardless of whether trade and regulatory complications get resolved.
The H200 processors remain produced and inventory-ready. Their eventual delivery to Chinese clients hinges on diplomatic discussions that currently show no signs of progress.
As of Friday, Nvidia has reported zero H200 transactions with Chinese purchasers, with Reuters confirming shipment delays stemming from ongoing US-China governmental disagreements regarding sales terms.
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