U.S. Formally Approves Nvidia H200 Exports to China
The Trump administration finalizes rules allowing Nvidia's advanced AI chips to ship to China, subject to testing, quotas, and security conditions.
The regulatory green light is now official.
The Trump administration on Tuesday finalized rules permitting Nvidia to sell its H200 AI chips to China, ending months of uncertainty following the December policy announcement. Shipments could begin as early as mid-February, pending final approvals from Beijing.
The decision represents a major reversal from Biden-era restrictions that blocked advanced AI chip sales to China on national security grounds. It also creates a significant revenue opportunity for Nvidia at a moment when AI chip demand shows no signs of slowing.
The Conditions
This isn't a blank check. The formal rules include several guardrails designed to address security concerns.
Chips must pass third-party testing to verify their AI capabilities before shipping to China. Chinese customers must demonstrate "sufficient security procedures" and cannot use chips for military purposes. Nvidia must certify that adequate H200 inventory exists in the U.S. before exports proceed.
Most importantly, China cannot receive more than 50% of the total H200s sold to American customers. That quota prevents China from capturing the majority of Nvidia's production.
Demand Is Already Overwhelming
Chinese technology companies have placed orders for more than 2 million H200 chips at roughly $27,000 each. That's approximately $54 billion in potential revenue—but Nvidia's current inventory sits at only 700,000 units.
Production is ramping. CEO Jensen Huang said at CES last week that Nvidia is adding capacity to meet demand from both China and global customers. The supply constraint, not regulatory approval, may be the binding factor on shipment timing.
The Policy Debate
Critics argue the export approval hands China advanced AI capabilities that could accelerate its military and surveillance programs.
"The rule would allow about two million advanced AI chips like the H200 to China, an amount equal to the compute owned today by a typical U.S. frontier AI company," said Saif Khan, a former National Security Council official.
The administration's counter-argument centers on competitive dynamics. White House AI czar David Sacks contends that allowing exports discourages Chinese competitors—particularly sanctioned Huawei—from investing in indigenous chip designs. If China can buy from Nvidia, the thinking goes, it won't spend resources catching up.
That logic is contested. Some analysts argue Huawei is already developing competitive chips regardless of Nvidia access, and that exports simply accelerate China's AI deployment timeline.
From Preview to Reality
We first covered this story in December when President Trump announced the policy shift. At the time, implementation details were uncertain and Beijing's response was unclear.
Tuesday's formal rule clarifies the regulatory framework. The 50% quota and testing requirements didn't exist in the December announcement—they emerged through the inter-agency review process.
Beijing still needs to approve imports on its end. Chinese officials have discussed bundling requirements that would force H200 purchases to include domestic chips. That condition hasn't been finalized.
What It Means for Nvidia
The China market was largely closed to Nvidia under Biden's AI Diffusion Rule. The H20—a deliberately downgraded chip designed for export compliance—generated meaningful but limited revenue.
H200 access changes the calculus. At $27,000 per chip with 2 million units on order, China could become one of Nvidia's largest markets again. Gross margins on H200s exceed 70%.
The stock has already rallied on the news. Nvidia added to its Wolfe Research "Alpha List" recognition this week, with analysts citing China exposure as an underappreciated catalyst.
For investors, the formal approval removes a key uncertainty. The question now is execution: can Nvidia produce enough chips to meet both Chinese and domestic demand?