Regulators have recently granted in-principle approval for Alibaba, Tencent Holdings Ltd. and ByteDance Ltd. to move to the next stage of preparations for purchases, people familiar with the matter said. The companies are now cleared to discuss specifics such as the amounts they would require, the people said, asking to remain unidentified discussing private talks. Beijing will encourage companies to buy a certain amount of domestic chips as a condition for approval, according to the people, though no exact number has been set.
Nvidia shares rose as much as 2.3% in premarket trading, while the American depositary receipts of Taiwan Semiconductor Manufacturing Co. gained 1.3%.
The discussions signals Beijing is moving ahead with plans to approve shipments of the H200 – a last-generation semiconductor that’s been thrust into the heart of sensitive US-China trade negotiations. It shows the government is prioritizing the needs of the major Chinese hyperscalers from Alibaba to Tencent, which are spending billions of dollars to build the data centers they need to develop and operate AI services.
That would mark a major win for Nvidia, which has angled to resume business with the world’s largest semiconductor arena. Chief Executive Officer Jensen Huang has said that the AI chip segment alone could generate $50 billion in the coming years.
In its absence, local rivals such as Huawei Technologies and Cambricon Technologies have thrived and plan to sharply increase production.
