The Nvidia H200 China Deal: A Tale of Approval and Blockage

During a recent summit in Beijing, President Trump raised concerns about chip exports, specifically mentioning Nvidia’s H200 model. Despite Trump authorizing sales in December 2025, no Nvidia H200 chips have been shipped to China. US Trade Representative Jamieson Greer even confirmed that semiconductor controls were not on the bilateral agenda.

However, beneath the surface, the issue lies not with Washington’s restrictions but with Beijing’s regulations. Several Chinese firms, including Alibaba, Tencent, ByteDance, and JD.com, have received US export licenses for the Nvidia H200 chips. Lenovo and Foxconn are also authorized as distributors. The deadlock arises because Beijing has instructed Chinese companies to limit their use of Nvidia chips to overseas operations while promoting domestic manufacturing.

Two frameworks, one deadlock

This impasse is a result of conflicting requirements. US rules dictate that H200 chips ordered by Chinese clients must be used solely in China, while Beijing mandates that Chinese tech companies restrict Nvidia chip usage to international operations and prioritize domestic suppliers like Huawei. This policy contradiction has led to a standstill in chip deliveries.

Commerce Secretary Howard Lutnick highlighted in a recent Senate hearing that Chinese firms are focusing on domestic suppliers like Huawei to reduce reliance on US semiconductors. Beijing’s State Council has also initiated a supply-chain security review to further minimize dependence on American chips.

What Huawei gained while diplomats talked

Amidst diplomatic conversations, significant developments have taken place. DeepSeek optimized its latest model for Huawei processors, Tencent announced an increase in Chinese GPU supply, and Alibaba’s T-Head GPUs entered mass production. These advancements underscore a strategic shift towards Huawei’s chips in Chinese tech infrastructure.

As a result, Nvidia’s revenue from China has plummeted, with the company projecting zero revenue from the country in the current quarter. The shift towards Huawei’s chips signals a long-term policy change rather than a temporary trade issue.

The read for the AI industry

The standoff between the US and China over chip exports has broader implications for the AI industry. Beijing’s directive to prioritize Huawei’s compute stack over Nvidia’s H200s signifies a structural shift in hardware architecture preferences. This strategic move could shape the trajectory of AI development in China.

Despite Trump’s remarks and Greer’s acknowledgment of China’s sovereignty in decision-making, the current status quo remains unchanged: the H200 deal is approved but frozen, allowing Huawei to fill the void left by Nvidia.

(Image source: The White House)

See Also: Can China’s chip stacking strategy really challenge Nvidia’s AI dominance?

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