Chinese technology firms are rushing to secure Nvidia’s H20 artificial intelligence chips after the U.S. chipmaker announced plans to resume sales in China, sources told Reuters. This development comes shortly after Nvidia CEO Jensen Huang met with former U.S. President Donald Trump, signaling a possible shift in the company’s approach to navigating U.S. export controls.
In its fiscal year ending January 26, Nvidia generated $17 billion in revenue from China about 13% of its total global sales highlighting the region’s importance to the company. However, escalating geopolitical tensions and stringent U.S. export restrictions targeting advanced AI hardware have complicated Nvidia’s business dealings in the country.
The H20 chip, a modified version of Nvidia’s cutting-edge AI processors, was specifically designed to comply with the U.S. export rules while still catering to China’s massive AI market. Demand for the H20 has surged as Chinese tech companies scramble to secure computing power for generative AI models, autonomous driving, and data analytics fields in which Nvidia’s chips dominate.
U.S. export controls, aimed at curbing China’s access to top-tier AI hardware over national security concerns, have weighed heavily on Nvidia. The company previously stated that these curbs could result in a $15 billion revenue loss, forcing it to pivot its product strategy and compliance measures.
Industry analysts believe the renewed sales of H20 chips could partially offset those losses and help Nvidia maintain a foothold in one of the world’s largest AI markets. However, the geopolitical landscape remains volatile, with Washington closely monitoring U.S. tech exports to China amid concerns over potential military applications of AI.
Meanwhile, Chinese firms are eager to stockpile Nvidia chips in anticipation of further restrictions, fearing potential disruptions to their technological roadmaps. The buying frenzy underscores how critical Nvidia’s products are to global AI development and how deeply international politics can influence the flow of innovation.
As the AI arms race intensifies, Nvidia finds itself walking a tightrope balancing compliance with U.S. regulations while striving to meet relentless demand in China, its second-largest market. The outcome could have lasting implications for global tech competition and AI supremacy.
