nvidia seeks green light to ship ai chips to china amid us policy headwinds

2025-07-23 nvidia

Washington, Wednesday, 23 July 2025.
nvidia is seeking permission to export its h20 chips to china. this request has ignited debate. us lawmakers are concerned about national security. they also worry about market access. the decision could greatly affect nvidia’s revenue. china is a key market for ai chips. nvidia’s ceo warned that export restrictions could cause nvidia to ‘permanently lose the chinese market’. nvidia’s market share in china has already dropped from 95% to 50% in just three months.

export ban impact

The U.S. government’s export ban on high-performance AI chips to China, implemented in April, has significantly impacted Nvidia [1]. Nvidia anticipated a $5.5 billion loss in the fourth fiscal quarter due to the ban [4]. The company also faced $4.5 billion in unsold H20 inventory and a $160 billion reduction in market value [7]. Wedbush Securities analyst Matt Bryson anticipates that easing export controls could boost Nvidia’s revenue in the third and fourth quarters, though it will likely remain below the $8 billion expected in the second quarter before the ban [1].

h20 chip specifics

The H20 chip is a customized version of Nvidia’s powerful data center AI accelerator, the H100, designed specifically for the Chinese market to comply with U.S. export controls [4][7]. Nvidia also announced a new chip, the RTX PRO, which it says is fully compliant with export regulations and suitable for applications like digital twins in smart factories and logistics [4]. Despite these efforts, the U.S. Bureau of Industry and Security (BIS) has maintained restrictions on Huawei’s Ascend 910B, 910C, and 910D chips, which compete with Nvidia’s offerings [1][2].

market dynamics and competition

The restrictions on Nvidia’s chip exports created an opportunity for Chinese manufacturers to fill the market gap [7]. Nvidia’s market share in China decreased from 95% to 50% within three months [7]. Nvidia CEO Jensen Huang has emphasized the importance of the Chinese market, stating that it is unique and that Chinese innovation cannot be stopped [7][8]. He also acknowledged that Huawei is a significant competitor, noting that it is “much bigger” and possesses both breadth and depth [8]. Analyst Melius Research significantly raised Nvidia’s target price, projecting its market capitalization could surpass $5 trillion due to the potential resumption of H20 sales [4].

financial analyst perspectives

Analysts from Citi and Jefferies suggest that resuming H20 chip sales would benefit other companies in the industry, particularly hyperscale cloud vendors like Alibaba, Tencent, Baidu, and cloud service provider Kingsoft Cloud [4]. Jefferies analysts, including Thomas Chong, believe that AI-sensitive stocks such as Kuaishou and Meitu would also benefit [4]. Bernstein estimates that for every $10 billion in revenue Nvidia recovers in the Chinese market, earnings per share could increase by approximately $0.25 [4]. A full recovery of $15 billion to $20 billion in revenue by fiscal year 2026 could boost EPS by $0.40 to $0.50, exceeding current market expectations by over 10% [4].

policy and strategic considerations

Some policy experts have suggested that easing tech export restrictions could be a quid pro quo for China resuming rare earth exports to the U.S. [1][2]. Zhang Xin, Director of the Digital Economy and Legal Innovation Research Center at the University of International Business and Economics, views the policy shift as a phased adjustment of strategic tools rather than a change in strategic goals [7]. Zhang Xin also notes that maintaining the ban would be more costly than its strategic return and that releasing the chip in specific negotiation scenarios could yield more attractive phased benefits for the U.S. [7].

Bronnen

nvidia china chip exports