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 was spotted taking a bike ride and browsing a fresh fruit stand in Shanghai, as well as enjoying beef hot pot at a modest restaurant in Shenzhen.

The carefree visit is not only good optics. Huang has real reason to be optimistic: his long lobbying campaign in Washington has finally paid off. As Huang walked around China, several media 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 chips in total under conditional licenses granted during the Nvidia CEO’s visit. Further approvals are expected in the coming weeks. (Nvidia and the tech companies did not immediately respond to requests for comment.)

The so-called chip sales are the culmination of a stunning reversal in U.S. policy over the past year. Under the Biden administration, the United States sharply tightened export controls on high-end AI chips and banned the sale of models such as the H200 to Chinese customers over national security concerns. The restrictions were intended 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 it was better to allow China access to some U.S. AI chips than to cede such a large and important market entirely to Chinese chipmakers, both economically and because it would theoretically keep Chinese companies dependent on U.S. technology.

In recent internal discussions, White House officials have also justified H200 sales by pointing to the continued smuggling of advanced chips into China, which they say proves U.S. restrictions have been ineffective, according to two people familiar with the matter. Officials argue that it is better to allow limited, regulated sales rather than an opaque gray market that gives U.S. authorities little visibility into the chips’ final destination.

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

It’s not just Huang and the Trump administration who will likely leave here happy. By allowing domestic companies to purchase 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 Technologies.

China’s national tech champions can now access the compute they desperately need to train powerful, near-border AI models, on par with the latest offerings from OpenAI and other U.S. labs. But by keeping tight control over who will buy Nvidia’s hardware, Beijing is helping to ensure that demand for Huawei chips remains high and that there are still strong incentives for companies to continue developing China’s domestic semiconductor ecosystem.

This result is “great evidence that David Sacks’ idea of ​​keeping China hooked on American technology is just not the way this is going to play out,” Bresnick says. “I see this as evidence that China is completely uncomfortable with letting its own burgeoning microchip industry be overwhelmed by Nvidia.”

But the real damage could come from whiplash in Washington. For years, policymakers have sent mixed signals about what the United States wants to accomplish on chip control, and China is watching them closely. “The worst thing we can do is go back and forth,” Bresnick says. “We have already given China the imperative to launch their own chips while giving them access at the same time.”

This is an edition of Zeyi Yang And Louise Matsakis Newsletter Made in China. Read previous newsletters here.