Nvidia Set to Resume H20 Chip Sales in China After Regulatory Hurdles

Nvidia announced on Monday, July 14, that it is preparing to restart sales of its H20 artificial intelligence (AI) chips to China. This decision follows a tumultuous period marked by stringent export restrictions imposed by the Trump administration in April, which were subsequently relaxed after high-level discussions. The H20 chip, while not Nvidia’s most advanced, is a powerful tool for running existing AI models, particularly in areas like digital manufacturing and smart logistics. It boasts superior memory bandwidth compared to Chinese alternatives and is fully integrated into Nvidia’s extensive software ecosystem, making it easier to deploy. Regulatory Back-and-Fort The regulatory saga began in April when the Trump administration enacted restrictions on H20 chip sales to China, citing concerns over the potential misuse of these chips in Chinese supercomputers. These restrictions, targeting chips with specific performance thresholds, threatened to cost Nvidia up to $15 billion to $16 billion in revenue, based on the substantial purchases made by Chinese tech giants like ByteDance, Alibaba, and Tencent in the first quarter of 2025. However, the restrictions were short-lived. After Nvidia CEO Jensen Huang attended a high-profile dinner at Trump’s Mar-a-Lago estate in early April, promising significant U.S. data center investments and job creation, the administration suspended the ban. Huang’s Diplomatic Efforts Huang has been actively engaging with both U.S. and Chinese officials to navigate these complex regulatory landscapes. In the United States, he met with President Trump and policymakers to discuss the importance of maintaining U.S. leadership in AI and to emphasize the benefits of accessible technology for global markets. Huang argued that China already possesses substantial computing capacity and does not rely solely on American tech for military advancements. Instead, he posited that the availability of U.S. tech in China is crucial for the growth and innovation of the global AI ecosystem. In China, Huang met with government and industry leaders in Beijing to highlight how AI can enhance productivity and expand opportunities. He stressed that AI should be treated as a fundamental resource, similar to energy, water, and the internet. Huang also shared Nvidia’s commitment to supporting open-source research, foundational models, and application development to democratize AI and support emerging economies globally. New RTX Pro Chip for China Alongside the H20, Nvidia is introducing the RTX Pro, a new GPU designed specifically for the Chinese market and described as fully compliant with U.S. export regulations. The RTX Pro is tailored for digital manufacturing applications, such as smart factories and logistics, where its capabilities in running existing AI models for day-to-day tasks will be highly valued. Despite its slightly lower performance compared to Nvidia’s cutting-edge H100 chip, the H20’s memory bandwidth and software ecosystem make it a compelling choice for Chinese businesses. Market Reactions The announcement has had a positive impact on Asian markets, particularly in Hong Kong, Taiwan, and mainland China. The Hang Seng Tech Index surged by up to 2.2%, and Beijing Sinnet Technology, a data center operator, saw its stock rise by as much as 7.6%. TSMC, a key supplier to Nvidia, also saw a 1.37% increase in its stock price. H20 Chip Specifications The H20 chip, based on Nvidia’s Hopper architecture, features CoWoS packaging technology and 96GB of HBM3 memory, providing a memory bandwidth of 4.0 TB/s. Its performance includes 296 TFLOPS in FP8 and 148 TFLOPS in FP16. Although it is not as powerful as the H100, which has 41% more GPU cores and 28% higher performance, the H20 is well-suited for specialized AI inference tasks, such as those required by Chinese tech companies. Analyst Perspectives Industry analysts have expressed mixed opinions on the recent developments. Jefferies analysts, led by Blayne Curtis, noted that prior to the suspension, no licenses for GPU shipments into China had ever been granted, highlighting the significant risk posed by the initial restrictions. Bernstein analysts argued that banning the H20 chip made little sense, given its lower performance compared to available Chinese alternatives. They suggested that a ban would only benefit Huawei, a leading Chinese tech firm, by eliminating competition and consolidating its market position. Company Profile Nvidia, founded in 1993, is a global leader in graphics processing units (GPUs) and AI technology. The company has played a crucial role in advancing AI research and applications through its powerful GPUs and comprehensive software ecosystem. Nvidia’s strategic moves in navigating the U.S.-China tech standoff reflect its commitment to maintaining strong relationships in both markets while adhering to regulatory requirements. Conclusion The relaxation of export restrictions on Nvidia’s H20 AI chips marks a pivotal moment in the ongoing U.S.-China tech rivalry. Huang’s diplomatic efforts underscore the delicate balance between national security concerns and commercial interests. As AI continues to reshape industries worldwide, the demand for powerful yet compliant chips like the H20 is expected to grow, reinforcing the strategic importance of both U.S. and Chinese markets for Nvidia and the broader tech industry.