Nvidia is preparing to resume high-end AI chip shipments to China, telling clients it aims to begin delivering H200 chips by mid-February—just before the Lunar New Year holiday. The move follows President Trump's December 8 approval that allows sales in exchange for a 25% surcharge.
Nvidia shares rose more than 1% on Monday after Reuters reported the shipping timeline, adding to a recovery that has seen the stock stabilize following last week's tech selloff.
The Deal Details
Trump granted Nvidia permission to ship its H200 AI chip to approved Chinese customers, requiring a 25% surcharge that will be shared with the U.S. government. Chinese President Xi Jinping reportedly "responded positively" to the arrangement.
The H200 is Nvidia's second-most powerful AI chip—roughly six times more capable than the H20, a downgraded chip the company has been selling in China since late 2023. For Chinese tech giants racing to build AI capabilities, the H200 represents a significant upgrade.
Strong Demand from Chinese Tech
Major Chinese companies including Alibaba and ByteDance have already reached out to Nvidia about purchasing the H200 and are eager to place large orders. Demand is so strong that Nvidia is reportedly considering adding new production capacity.
Initial shipments are expected to total 5,000 to 10,000 chip modules—equivalent to 40,000 to 80,000 individual H200 chips. Nvidia plans to fulfill these orders from existing inventory while ramping production.
The Political Complexities
Not everyone in Washington is pleased. Senators Pete Ricketts (R-NE) and Chris Coons (D-DE) have introduced legislation to block advanced AI chip exports to China for more than two years, arguing the technology could enhance China's military capabilities.
In Beijing, the deal faces its own complications. The government has yet to formally approve H200 purchases, and one proposal would require bundling each H200 purchase with domestic Chinese chips—a condition designed to protect China's homegrown semiconductor industry.
Impact on Domestic Chinese Chips
Trump's H200 decision arrives at an awkward moment for China's push to develop competitive AI chips domestically. Chinese chipmakers haven't yet produced products matching the H200's capabilities, and some worry that allowing the advanced Nvidia chips could undercut domestic development efforts.
What It Means for Nvidia
China was once Nvidia's largest market, accounting for over 20% of revenue before export restrictions tightened. Regaining access—even with a 25% surcharge—could add billions to Nvidia's top line and reinforce its dominance in AI infrastructure.
The Bottom Line
Nvidia's path back into China is navigating a minefield of geopolitical tensions, congressional opposition, and Beijing's own industrial policy goals. But with demand from Alibaba and ByteDance running hot, the commercial incentives are powerful. February's shipments will test whether commerce can triumph over politics in the AI chip wars.
