Nvidia chip export to China gets green light, but Beijing holds applause

2025-08-18 nvidia

Washington, Monday, 18 August 2025.
The Trump administration’s decision to ease restrictions on Nvidia’s AI chip exports to China has been met with a surprisingly cold reception from Beijing. Despite previously seeking a rollback of these tech barriers, China’s government is now expressing security concerns about the very chips they once wanted. This policy U-turn raises questions about the future of US-China tech relations and Nvidia’s revenue streams. The H20 chip at the center of the debate was called obsolete by Trump.

China’s subdued response

China’s muted response includes summoning Nvidia to address security concerns and advising domestic firms against adopting the H20 chip [1]. Xiang Ligang, director-general of a Beijing-based technology industry group, questioned the motives behind selling chips deemed ‘obsolete’ to the Chinese market [1]. He stated that China possesses its own capabilities and won’t be crippled by restrictions [1]. Ligang suggested Chinese companies might opt for domestically produced chips to ensure a secure supply [1]. This lukewarm reception casts doubt on Nvidia’s prospects for significant revenue gains in China, influencing investor sentiment [GPT].

Market impact and competition

Bernstein analysts estimated that without export restrictions, Nvidia’s H20 shipments to China could have reached 1.5 million units in 2025, generating approximately $23 billion in revenue [1]. However, these restrictions have spurred domestic chip development in China [1]. Bernstein projects that China’s domestic AI chip market share will increase from 17% in 2023 to 55% by 2027 [1]. Simultaneously, the market share of American suppliers like Nvidia and AMD is expected to shrink from 83% to 45% [1]. Huawei is projected to ship around 700,000 advanced AI chips in 2025 [1]. This intensifying competition poses a long-term challenge to Nvidia’s dominance [GPT].

Nvidia’s perspective and challenges

Nvidia maintains that its chips do not have backdoors that could allow unauthorized access [1]. An Nvidia spokesperson stated that the H20 chip will not enhance any military capabilities [7]. The spokesperson added that prohibiting the H20 would cost American taxpayers billions without any benefit [7]. Counterpoint’s Brady Wang noted the H20’s complete ecosystem, encompassing hardware and software support, makes it attractive despite cost disadvantages [1]. However, Chinese regulators have reportedly ordered major tech companies to halt Nvidia chip purchases pending national security reviews [7]. This situation creates uncertainty for Nvidia’s market position [GPT].

Geopolitical considerations

Six Democratic senators have requested President Trump reconsider allowing Nvidia to sell AI chips to China, even with a 15% revenue share for the U.S. government [7]. They argued that national security and military readiness depend on maintaining a competitive edge in sensitive technologies [7]. The senators expressed concern that this arrangement could weaken America’s technological advantage [7]. The Trump administration, however, appears to be prioritizing economic gains [7]. This divergence in perspectives highlights the complex geopolitical considerations influencing Nvidia’s operations in China [GPT].

Bronnen

export controls nvidia china