The U.S. government has signaled that it is prepared to permit China-based ByteDance to acquire Nvidia's H200 artificial intelligence processors - but the transaction remains unsettled because Nvidia has not accepted several conditions attached to the potential license, according to a person familiar with the matter.
That individual said the Commerce Department indicated about two weeks ago that it would approve a license for the sale. Nvidia, however, has not agreed to the government's current draft of a Know-Your-Customer requirement - one of several stipulations intended to ensure that China's military does not gain access to the chips.
More broadly, people familiar with the discussions say Nvidia is in ongoing talks with U.S. officials over the precise terms of licenses that would authorize shipments of H200 chips to Chinese companies. The discussions involve how to balance U.S. national security concerns with commercial feasibility for American suppliers.
In a company statement, Nvidia framed its role as an intermediary. The company said it is positioned between the U.S. government and potential customers who would ultimately be required to comply with U.S. restrictions. Nvidia added: "We aren’t able to accept or reject license conditions on our own." The statement continued: "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."
ByteDance - the owner of TikTok and a major AI firm in China - could not be immediately reached for comment, and the Commerce Department did not immediately respond to a request for comment, according to the sources.
Sources also said the U.S. is expected to permit sales of the H200 and comparable chips from AMD to China, provided that outstanding national security concerns are satisfactorily addressed. The sources said the anticipated approvals follow direct clearance from President Donald Trump, conditional on resolving the remaining safeguards.
Context and implications
The reported standoff centers on the exact design and enforceability of post-sale safeguards - including KYC checks - that U.S. authorities want in place to prevent military access. Nvidia has emphasized the need for any conditions attached to licenses to be workable in commercial terms to avoid incentivizing customers to seek non-U.S. alternatives.
As negotiations proceed, the outcome will determine how U.S. AI chipmakers can pursue sales into China while meeting regulatory and security demands set by the U.S. government.