According to reports from the Financial Times and Reuters, suppliers of essential components—including Printed Circuit Boards (PCBs) and specialized cooling modules—have paused their production lines. The halt is a preemptive move to avoid mounting inventory losses after Chinese customs agents in Shenzhen and other hubs were reportedly told that the H200 chips are “not permitted to enter the country.”
The “1 Million Order” Crisis
The timing of the blockade has caught the industry off-guard, especially since Nvidia had been operating at maximum capacity to meet massive demand from the East.
- Volume at Risk: Nvidia had projected over 1 million H200 orders from Chinese clients (including Alibaba, Tencent, and ByteDance) for delivery starting in March 2026.
- Supplier Impact: Parts makers had been working “around the clock” since late 2025 to prepare for these shipments. With the customs block, these firms now face billions in potential write-offs for hardware that cannot be repurposed for other chips.
- The “Blackwell” Factor: Because the H200 is specifically designed for high-end AI training and is a predecessor to the newer Blackwell architecture, its components are highly specialized and lack “secondary market” utility.
Why is China Blocking US-Approved Chips?
The blockade is seen as a strategic counter-move to the U.S. Commerce Department’s decision on January 13, 2026, which allowed H200 sales only under strict conditions:
- The 25% Fee: The Trump administration mandated a 25% revenue share from these sales be paid to the U.S. government.
- Volume Caps: China was restricted to receiving no more than 50% of the volume sold to U.S. customers.
- Domestic Preference: Beijing has responded by “semi-coercively” urging tech giants to prioritize Huawei Ascend and other domestic AI chips, using the customs block as a bargaining chip in broader trade negotiations.
| Metric / Event | Status (Jan 20, 2026) |
| H200 Unit Price | ~$27,000 per chip |
| Total Orders in Limbo | 1.1 Million+ |
| Customs Directive | “Basically a ban for now” |
| Supplier Status | Production Halted |
Impact on Chinese Tech Giants
Despite the government’s push for domestic silicon, Chinese AI labs are in a “compute drought.”
- The Performance Gap: While Huawei’s Ascend 910C is a capable domestic alternative, industry benchmarks show the H200 remains significantly more efficient for large-scale training of advanced models like the upcoming DeepSeek V4.
- Black Market Surge: Reports suggest the customs block has already triggered a surge in the “shadow market” for banned but more advanced chips like the B200, as firms attempt to circumvent official channels.
Conclusion: A New Phase of the Trade War
The suspension of H200 production by suppliers signals that the industry no longer believes in a quick resolution to the U.S.-Sino tech divide. As Nvidia CEO Jensen Huang attempts to navigate this “customs wall,” the company’s revenue projections for the first half of 2026 now face a significant downward revision. For the global AI market, this blockade confirms that silicon sovereignty has officially replaced global cooperation as the dominant theme of 2026.
