Nvidia’s Campaign to Sell AI Chips to China Finally Pays Off

Jensen Huang seems to be having a lot of fun in China this week. The Nvidia CEO has been spotted on a leisurely bike ride and browsing a fresh fruit stand in Shanghai, as well as enjoying a beef hot pot at a modest restaurant in Shenzhen.

The carefree tour is not only good optics. Huang has real reason to feel excited: his long-running lobbying campaign in Washington has, in fact, finally paid off. While Huang was gallivanting around China, multiple news outlets reported that Beijing had approved the sale of hundreds of thousands of powerful Nvidia H200 AI chips to Chinese companies.

According to Reuters, China has agreed to allow ByteDance, Alibaba and Tencent to buy more than 400,000 of the chips in total under conditional licenses granted during the visit of the Nvidia CEO. More approvals are expected in the coming weeks. (Nvidia and the tech companies did not immediately respond to requests for comment.)

The alleged chip sales are the culmination of a brilliant American policy reversal over the past year. Under the Biden administration, the US sharply sharpened export controls on high-end AI chips and blocked models like the H200 from being sold to Chinese customers due to national security concerns. The restrictions were meant to limit Beijing's ability to develop powerful artificial intelligence systems with military or other sensitive applications.

But under President Trump, a different logic — promoted by Huang and White House AI and crypto czar David Sacks — has prevailed. They argued that allowing China access to some US AI chips was better than giving up such a large and important market entirely to Chinese chipmakers, both economically and because it would theoretically keep Chinese companies dependent on US technology.

In recent internal discussions, White House officials have also justified the H200 sale by pointing to the continued smuggling of advanced chips in China, which they argue proves that U.S. restrictions have been ineffective, according to two people familiar with the matter. The officials argue that allowing limited, regulated sales is preferable to an opaque gray market that gives U.S. authorities little visibility into where the chips may ultimately end up.

The White House did not immediately respond to a request for comment.

It's not just Huang and the Trump administration who are likely to be happy about this. By having domestic companies buy H200 chips in limited quantities, Beijing has the opportunity to achieve two strategic goals at once, says Samuel Bresnick, a researcher at Georgetown's Center for Security and Emerging Technology.

China's domestic tech champions can now access the computing they desperately need to train powerful, near-limit AI models on par with the latest offerings from OpenAI and other US labs. But by keeping tight control over who can buy Nvidia's hardware, Beijing helps ensure demand for Huawei chips remains high and there are still strong incentives for companies to continue building China's domestic semiconductor ecosystem.

That result is “excellent evidence that this David Sacks idea of ​​holding China to American technology is just not how this is going to go,” says Bresnick. “I see this as evidence that China is completely uncomfortable with the idea of ​​having its own growing chip industry handed over to Nvidia.”

But the real damage may come from the whiplash in Washington. For years, policymakers have sent mixed signals about what the US wants to achieve with chip controls, and China has been watching closely. “The worst possible thing we can do is just go back and forth,” says Bresnick. “We've already given China the imperative to get its own chips while at the same time giving them access.”

This is an edition of Zeyi Yang and Louise Matsakis' Made in China newsletter. Read previous newsletters over here.