Artificial intelligence chip designer Nvidia (NVDA:NASDAQ) hopes to resume sales of its H20 processing chips to China with Washington’s blessing in what would be a major boon for a company that has suffered from US export curbs.
The H20 is a less-advanced semiconductor designed for AI workloads that comply with US export restrictions to China introduced during the Biden administration in 2023. Released in early 2024, the H20 was the top chip used by Chinese tech firms for AI training before Washington blocked its sale in April.
Nvidia is perhaps the most high-profile tech company to be caught in the crosshairs of US-China tensions over trade and technology. The tech giant has faced several rounds of restrictions that have forced it to restrict access of its most advanced chips to China. Nvidia took a $4.5 billion write-down on unsold H20 inventory in May 2025 and said sales in its last financial quarter would have been $2.5 billion higher without any export curbs.
Nvidia CEO Jensen Huang launched a recent charm offensive in China during a trip to Beijing, as the US chip giant navigates the volatile tech war between the world’s two largest economies, praising China’s open-source AI developments.
Huang also stressed the importance of the Chinese market for Nvidia in an interview with state broadcaster CCTV, noting Huawei Technologies as a formidable competitor.
The sales resumption of Nvidia’s H20 chips in mainland China will clear a hardware bottleneck and boost the country’s ambitions in AI despite lingering supply uncertainties about the highly sought-after processor, according to Morgan Stanley.
The lifting of US export restrictions on the H20 ‘removes a key near-term headwind’ for China’s AI development’, the analysts wrote in a report that also predicts a 60% investment increase by Chinese cloud computing providers this year to an estimated 380 billion yuan, or approximately $53 billion.
However, clearing supply bottlenecks will take time and Nvidia has warned Chinese customers that it has limited supplies of H20 chips, including tech giants Alibaba (BABA:NYSE), Tencent (0700:HKG), Baidu (BIDU:NASDAQ), and ByteDance. The lack of advanced GPUs (graphics processing units) had already led to delays in upgrades to China’s latest large language models, such as DeepSeek’s highly anticipated model R2, according to Morgan Stanley.
Despite the tech curbs, Nvidia reported record first-quarter earnings and revenues in May, catapulting the share price to $173 all-time highs and making the company the first in history to command a market cap above $4 trillion. The Santa Clara-based firm is set to report second-quarter results on 27 August.
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