Nvidia stock experienced a 2.2% increase on Monday following reports from Semafor indicating that the U.S. Commerce Department is preparing to approve the export of the H200 chip to China. This development would re-establish Nvidia's presence in the Chinese AI hardware market after a period of exclusion.
The final approval for these shipments is pending a decision from Donald Trump, should he return to the White House in 2025. The H200 chip is positioned approximately 18 months behind the company's most advanced offerings and falls below the most restricted tier of technology.
The White House is reportedly planning to instruct the Commerce Department to authorize the export of Nvidia GPUs that are about a year and a half less advanced than its latest designs. This approach aims to strike a balance between preventing China from accessing cutting-edge technology and fully ceding the market to local competitors.
This strategic move specifically targets the H200 chip, rather than the more recent Blackwell or H100 models.
Previously, China had blocked imports of the less powerful H20 chip, citing security concerns, and had instructed companies to cease purchasing it. This decision effectively removed Nvidia from the market and created opportunities for domestic suppliers within China's data center sector.
The export decision follows public statements from Howard Lutnick, the U.S. Commerce Secretary, who indicated that the ultimate decision rested with Donald Trump.
If the approval is granted, Nvidia would regain direct access to one of the world's largest markets for AI chips.
China's Advancements Amidst U.S. Supply Constraints
The initial export restrictions were implemented under the Biden administration with the objective of slowing China's progress in artificial intelligence. However, some officials within the Trump administration have suggested that this policy did not achieve its intended goal, as Chinese firms continued to advance their capabilities despite the limitations.
Companies such as DeepSeek and Alibaba have released large language models that have demonstrated performance levels comparable to global benchmarks. Huawei has also managed to fill hardware deficits created by the blocked U.S. supply. Proponents of the original export controls maintain that these regulations provided valuable time, allowing U.S. companies to secure an early lead in overseas market share during a crucial growth period.
The United States continues to face challenges in rebuilding its chip supply chain and remains reliant on Taiwan Semiconductor Manufacturing Company (TSMC) for advanced production. China also holds significant leverage through its control over rare earth minerals, which are essential components for batteries and critical systems that underpin both AI and cryptocurrency infrastructure.