US President Donald Trump’s administration is quietly debating whether to allow the American tech giant Nvidia to sell its advanced H200 AI chips to Chinese companies.
Reuters reported that the Commerce Department is reviewing a change to its policy that blocks sales of such advanced chips to China. The same report said plans “could change,” highlighting the sensitivity and uncertainty surrounding the talks.
A White House official, while declining to comment on the specific review, told Reuters, “The administration is committed to securing America’s global technology leadership and safeguarding our national security.”
If the move comes to fruition, it would mark a significant shift in policy and has already sent ripples through financial markets.
Why the H200 is a big deal
The H200 is one of Nvidia’s high-end AI chips. It features more high-bandwidth memory than its predecessor, the H100, which enables it to process data faster. It is also estimated to be about twice as powerful as the H20 chip, the most advanced chip Nvidia is currently allowed to sell in China under US rules.
Nvidia told Reuters that current regulations “do not allow the company to offer a competitive AI data center chip in China, leaving that massive market to its rapidly growing foreign competitors.” This potential policy shift would represent a major win for Nvidia CEO Jensen Huang, who has been lobbying hard against the export curbs.
Huang has previously emphasized the massive financial opportunity being lost, once estimating the China AI chip market’s value at nearly $50 billion, with the potential to balloon to as much as $200 billion by the end of the decade.
Talks about the H200 come just weeks after Trump and Chinese leader Xi Jinping agreed to a trade and tech truce in Busan. The chip discussions signal a softer tone toward Beijing compared to earlier hardline stances.
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China’s chipmaker jitters
News of the possible H200 sales sent ripples through the Asian markets on Monday, causing a volatile trading day for Chinese semiconductor manufacturers.
According to Asia Financial, shares of leading AI chipmaker Cambricon initially slipped as much as 2.5% before recovering to close with a gain of over 1%. Competitor Hua Hong Semiconductor saw its Hong Kong-listed shares fall more than 9% in early trade, closing down about 5%.
Meanwhile, state-backed SMIC (Semiconductor Manufacturing International Corporation) also fell by more than 6% before paring losses to end the day down about 1%.
The volatile reaction highlights the vulnerability of local chipmakers. While Beijing has invested billions in its domestic chip industry and major Chinese tech firms have turned to local suppliers after the US restrictions intensified, the potential entry of the powerful H200 could threaten their progress and demand for homegrown chips.
Nvidia, which once controlled over 95% of China’s AI market, has seen its market share essentially vanish. Huang recently emphasized this point to Fox News, saying he’s “forecasting China’s sales to be zero. It’s zero for the next quarter, zero for the quarter after that… We’re assuming it’s going to be zero.” The H200 decision could change that forecast entirely.
The Washington divide
The move is already generating strong pushback from China hawks in Washington, who fear that providing China with more advanced AI chips could inadvertently bolster Beijing’s military capabilities. The previous administration, led by Joe Biden, had set limits on such exports due to these national security concerns.
Meanwhile, US lawmakers are trying to preempt any such policy easing. According to Bloomberg, a bipartisan group of senators is reportedly drafting legislation that would force the Commerce Department to deny licenses for all currently restricted chip exports to China. This bill, if passed, would render the administration’s H200 discussions moot.
The internal debate pits national security concerns against the desire for a broader de-escalation of trade tensions with China.
On the chip export front, a plan to supply South Korea with more than 260,000 Nvidia AI chips is tied to a $10 billion push to expand the country’s AI infrastructure.