A significant regulatory shift is providing China’s technology companies with enhanced capabilities in the global artificial intelligence race. Beijing has granted approval for leading firms, including Alibaba and Tencent, as well as the startup DeepSeek, to purchase approximately 400,000 Nvidia H200 graphics processing units (GPUs). This development substantially reduces a key operational risk for funds tracking the sector, such as the Invesco China Technology ETF.
The authorization to acquire Nvidia’s H200 processors is a critical move for the industry. These chips deliver a memory bandwidth roughly 60% greater than their predecessor, the H100, enabling Chinese platforms to maintain pace with U.S. competitors in training complex AI models. Market observers note that China’s National Development and Reform Commission (NDRC) is currently reviewing specific conditions for these imports. Expectations are that buyers will be required to purchase domestic semiconductors alongside the Nvidia hardware, a measure designed to simultaneously bolster the local chip industry.
JPMorgan strategists have identified 2026 as a potential “activation year” for AI applications in China, marking a pivot toward mainstream adoption. Evidence of this trend is seen in the success of ByteDance’s DouBao chatbot, which now reports over 100 million daily active users. The central question for investors is how this scale translates into sustainable profitability.
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The investment focus is increasingly shifting toward firms that are already generating revenue from AI through advertising and operational efficiency gains. This environment favors established platforms within the ETF’s holdings—such as Tencent in enterprise software and Baidu in infrastructure—over more speculative early-stage ventures.
Separate growth impulses are emerging from the hardware sector, specifically robotics. Morgan Stanley has doubled its sales forecast for humanoid robots in China for 2026 to 28,000 units. This revised outlook is driven by an anticipated 16% decline in component costs during the current year. Falling prices are accelerating the integration of sophisticated AI models into physical machines, creating new growth avenues for industrial technology component manufacturers.
While the Nasdaq index retreated 0.7% to 23,685.12 points on Friday, China’s technology stocks are demonstrating a growing independence from broader global market sentiment. The near-term trajectory for the sector will likely be influenced by the final details of the NDRC’s stipulations on chip imports. A mandated purchasing ratio linking Nvidia GPUs to domestic alternatives could particularly strengthen semiconductor-related holdings within the ETF. Furthermore, upcoming quarterly earnings reports from Alibaba and Baidu will be closely scrutinized for concrete data on the growth of AI-powered advertising revenue.
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