US reportedly lets Nvidia export H20 chips to China

The US Commerce Department has begun granting Nvidia licenses to export its H20 chips to China, according to a US official.

The move follows a policy reversal last month that lifted an earlier ban on the sale of the H20 chip, which Nvidia had developed to comply with US export controls.

Exports of Nvidia’s other advanced AI chips to China remain restricted.

Nvidia had previously warned that the curbs would cut US$8 billion from its July quarter sales, before the latest policy change.

The number of licenses issued, the Chinese companies allowed to receive shipments, and the value of approved exports are not yet known.

In the first quarter, Nvidia said H20 chip sales reached US$4.6 billion, and China accounted for 12.5% of its total revenue.

The US has tightened advanced chip exports to China in recent years to limit Beijing’s AI and defense capabilities.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Export license approval may not reverse Nvidia’s declining China market position

While the US government’s decision to issue H20 export licenses removes a major regulatory barrier, Nvidia faces a more challenging competitive landscape than when it was first banned.

Analysts project Nvidia’s market share in China will drop from 66% in 2024 to 54% in 2025, despite the H20’s return to market 1. This decline reflects how Chinese competitors like Huawei, Cambricon, and Hygon have used the export restriction period to gain market presence.

The trend toward localization appears structural rather than temporary. Research firm Bernstein forecasts China’s AI chip localization ratio will surge from 17% in 2023 to 55% by 2027 1.

This suggests that even with regulatory approval, Nvidia may struggle to reclaim its dominant position as Chinese companies and government buyers have adapted to domestic alternatives during the restriction period.

2️⃣ US maintains strategic compute advantage despite policy reversals

The license approval reflects a broader US strategy to maintain technological leadership through controlled access rather than complete restrictions.