Nvidia can't seem to escape the regulatory spotlight when it comes to China. Just two weeks after President Trump announced approval for the company to sell its H200 AI chips to Chinese customers, the U.S. Commerce Department has sent license applications to the State, Energy, and Defense Departments for additional review.
The agencies have 30 days to weigh in, according to export regulations. For Nvidia—and for investors betting on the company's ability to access the world's second-largest AI market—it's another round of uncertainty in a saga that has no clear end.
The Original Deal
On December 8, Trump announced that Nvidia would be permitted to sell its H200 chips to China under specific conditions. The key stipulation: 25% of the chip sale revenue would be paid to the U.S. government. Rather than lifting export restrictions outright, the arrangement requires that recipients be vetted through Commerce Department licensing.
The approval was a major win for Nvidia, which has watched its China business shrink as export controls blocked sales of its most advanced chips. The H200 isn't Nvidia's most powerful offering—that would be the Blackwell generation—but it's almost six times as powerful as the H20 chips that were previously the most advanced technology China could access.
Surging Demand
The approval triggered an immediate response from Chinese tech giants. According to Reuters, companies including Alibaba and ByteDance have already been in touch with Nvidia to figure out large orders for the H200. Demand has been strong enough that Nvidia is considering ramping up production—a remarkable turnaround for a product that wasn't even available in China a month ago.
The New Uncertainty
The fresh inter-agency review adds a new layer of complexity. While the Commerce Department initially approved the sales, the Defense, State, and Energy Departments each have equities in chip export policy. Defense worries about AI capabilities in Chinese military applications. State considers diplomatic implications. Energy weighs nuclear proliferation concerns related to advanced computing.
The 30-day review period means resolution won't come until mid-January at the earliest—well into 2026.
Political Opposition
Meanwhile, bipartisan congressional opposition is building. Senators Pete Ricketts (R-NE) and Chris Coons (D-DE) introduced legislation on December 4 that would block exports of advanced AI chips to China for more than two years. The bill faces an uncertain path, but its existence signals that the administration's approach isn't universally accepted.
China's Response
Adding another twist: China itself may limit access to the H200 even if U.S. approvals hold. The Financial Times reported that Beijing would "limit access" to the chips, citing unidentified sources. The motivation isn't entirely clear—it could reflect concerns about technology dependence on American suppliers, or it could be a negotiating tactic.
What It Means for Nvidia
Nvidia's stock rose on the TikTok deal news (Oracle's cloud infrastructure is powered significantly by Nvidia chips) and on reports that China demand for H200s is strong. But the regulatory uncertainty hasn't gone away.
For the company, China represents both its biggest opportunity and its biggest regulatory risk. Every major AI development in China—from Alibaba's models to ByteDance's recommendation systems—could be running on Nvidia hardware. That's a massive addressable market. But it's a market that requires navigating a constantly shifting regulatory landscape on both sides of the Pacific.
The Bottom Line
Nvidia's China chip saga is far from over. The H200 approval created hope, but the inter-agency review adds uncertainty. Congressional opposition adds political risk. And China's own ambivalence about American chip dependence adds a wildcard. For investors, Nvidia's AI leadership is undeniable—but the China question will continue to create volatility until there's genuine policy stability. Don't hold your breath.
