Nvidia shares closed at $182.70, up 1.07 percent, after the U.S. government began issuing licenses for the company to export its H20 AI chips to China, reversing an earlier ban.
Key Takeaways
- 1U.S. Commerce Department starts granting Nvidia licenses to sell H20 AI chips in China.
- 2Decision follows CEO Jensen Huang’s meetings with President Trump at the White House.
- 3Reversal spares Nvidia from a forecasted $8 billion quarterly revenue loss.
- 4Security experts warn approval could aid China’s military and AI ambitions.
What Happened?
The U.S. Commerce Department’s Bureau of Industry and Security has started approving export licenses for Nvidia’s H20 AI chip to China. The move ends months of uncertainty after the April ban under President Trump that blocked shipments of the product, which was designed to comply with Biden-era AI export controls. The decision came shortly after Nvidia CEO Jensen Huang met with Trump for the second time in recent weeks, following an earlier Oval Office discussion on the issue.
From Ban to Reversal
The H20 chip was built specifically for the Chinese market to meet Washington’s rules restricting the export of more advanced AI processors. In April, the Trump administration abruptly halted its sale to China, catching Nvidia and its customers off guard. The company warned of an $8 billion revenue shortfall in the July quarter due to the restrictions. Actual losses included $4.5 billion in direct impact and $2.5 billion in missed sales.
Nvidia Stock Price Last Close:
Sources told Reuters and the Financial Times that the decision to issue licenses came two days after Huang’s most recent meeting with Trump. The company had filed export applications in July and was told by officials that approval would come soon, but the delay stretched into weeks.
Security Concerns and Political Debate
The reversal has split opinion in Washington. Twenty national security experts, including former Deputy National Security Adviser Matt Pottinger, urged Commerce Secretary Howard Lutnick to keep the ban, calling the approval a “strategic misstep” that could undermine U.S. competitiveness in artificial intelligence and defense. Nvidia rejected these claims as “misguided”, arguing that restricting U.S. technology only pushes China to accelerate its own innovation.
Exports of Nvidia’s other advanced AI chips remain blocked. U.S. administrations from both parties have maintained strict limits on selling cutting-edge chips to China to slow Beijing’s AI and defense development.
Nvidia’s Position and Market Stakes
China accounted for 12.5% of Nvidia’s revenue in the first quarter of 2025, and the H20 chip generated $4.6 billion in Q1 sales. Huang estimates China’s AI hardware market could reach $50 billion within the next two to three years. He has warned that without access to this market, Nvidia’s global leadership could weaken, especially as local competitors like Huawei gain share. Nvidia’s dominance in China has already dropped from 95% to 50% over the last four years.
No Backdoors, Says Nvidia
Amid Chinese concerns about possible “backdoor” risks in the H20 chip, Nvidia has publicly opposed adding any surveillance or remote-control features to its products. Chief Security Officer David Reber Jr. wrote in a blog post titled “No Backdoors. No Kill Switches. No Spyware.” that the company’s GPUs must remain free from such vulnerabilities to protect user trust. Nvidia’s position echoes other tech giants, including Apple, which have resisted similar government demands for built-in access.
CoinLaw’s Takeaway
I see this as a huge win for Nvidia in the short term, but it’s a politically risky one. The company avoided a major revenue hole and kept a foothold in one of the world’s biggest AI markets. Still, this decision sits right in the middle of the tug-of-war between economic gains and national security fears. If Washington’s mood swings again, Nvidia could be right back where it started. The next few quarters will show whether this reprieve becomes a stable business path or just a temporary lifeline.
