China has approved the first batch of Nvidia's H100 artificial intelligence chips for import, indicating Beijing is trying to balance its AI needs and domestic development.

According to foreign media, two sources, who asked not to be named, told Reuters that ByteDance, Alibaba, and Tencent have been approved to buy more than 400,000 H100 chips in total, while other companies are also lining up for the next approvals.

The approval came as Nvidia's Chief Executive Jensen Huang was on a visit to China this week.

China's Ministry of Industry and Information Technology and Nvidia have both declined to comment. ByteDance, Alibaba, and Tencent have also not made any announcements.

The case of Nvidia's second-most powerful AI chip, the H100, had become a source of tension in US-China relations.

Despite strong demand from Chinese companies and US approval for exports, Beijing's hesitation to grant import permits had been the biggest obstacle.

Earlier this month, the US had formally paved the way for Nvidia to sell the H100 to China. However, the final decision was in the hands of Chinese authorities.

It was not clear in recent weeks whether Beijing would grant approval, as the government wants to balance meeting the growing domestic demand for advanced AI chips and promoting the domestic semiconductor industry.

Chinese customs authorities had told agents that H100 chips were not allowed to enter China.

But Chinese tech companies have ordered more than two million H100 chips, far exceeding Nvidia's available stock.

It remains uncertain how many more companies will be approved for future shipments or what criteria Beijing is using to determine eligibility.

Huang arrived in Shanghai last Friday for Nvidia's traditional annual gatherings with its China employees and later traveled to Beijing and other cities.

The H100 approvals suggest Beijing is prioritizing the needs of major Chinese internet companies, which are spending billions of dollars to build data centers and develop AI services to compete with US rivals, including OpenAI.

While Chinese companies, such as Huawei, now produce products close to Nvidia's chip performance, they still lag behind the H100.

The H100 provides about six times better performance than Nvidia's H100 chip. Nevertheless, Beijing has been negotiating with companies to require them to buy a certain quota of local chips in exchange for approval of foreign semiconductor imports.