Nvidia seeks US approval to resume China sales of H20 AI chips

Nvidia announced on July 15, that it is applying to the US government to resume sales of its H20 general processing units to clients in China.

The company said it has received assurances that licenses for these sales will be granted.

The H20 chips were previously restricted under export controls established in April, which required Nvidia to obtain a license for sales in China.

This announcement follows a meeting between Nvidia CEO Jensen Huang and US President Donald Trump, where Huang discussed Nvidia’s role in job creation and US leadership in AI.

Nvidia is also developing a new AI chip for the Chinese market, reportedly less advanced than the H20.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Export controls catalyzed domestic chip development in China

US restrictions on Nvidia’s AI chips accelerated China’s efforts to develop homegrown alternatives, creating lasting competitive changes despite the policy reversal.

During the restrictions, Huawei emerged as a formidable competitor with its Ascend 910C GPU, increasing its market share to 25%, while Nvidia’s share in China fell from 60% to 45% 1.

The temporary ban created a market vacuum that allowed domestic players to gain customer trust and experience they wouldn’t have otherwise acquired.

This development reflects historical instances where trade restrictions have driven technological self-sufficiency, such as Japan’s semiconductor industry growth following 1980s US trade tensions.

The lasting impact of this technological advancement means Nvidia will likely face a more competitive landscape in China, even as sales resume, with Chinese alternatives now firmly established in the ecosystem.

2️⃣ Tech giants face growing vulnerability to geopolitical shifts

Nvidia’s experience demonstrates how even market-dominant companies must navigate complex diplomatic landscapes that can dramatically impact their business operations.

The company lost $2.5 billion in revenue and took a $4.5 billion charge for unsold inventory due to the H20 chip restrictions 2, highlighting the substantial financial consequences of geopolitical tensions.