Nvidia $NVDA ( ▼ 2.05% ) is running into the classic AI chip trade problem: the US can open the door, but China still controls the lock.
Shares dipped less than 1% early Wednesday after Reuters reported that China is not allowing Nvidia’s H200 AI chips to enter the country, citing three people briefed on the situation. One source reportedly said it is “basically a ban for now,” though it could change.
Reuters also noted it is unclear whether the directives apply to existing H200 orders or only new orders.
US Just Approved the Sales, China Adds Red Tape
This comes at an awkward moment for Nvidia.
On Tuesday, the Commerce Department revised export license review policy for certain semiconductors, creating a clearer pathway for Nvidia to ship chips like the H200 to China. That shift effectively moved H200 exports closer to a case-by-case approval process rather than an automatic rejection.
But now China appears to be slowing or stopping those imports on its own side.
China’s Core Goal: Avoid Foreign Chips Owning Its AI Market
China has been wary of letting foreign chips dominate its AI ecosystem, especially at a time when it is trying to ramp domestic semiconductor production.
This is not new.
Back in April, the US imposed export restrictions during peak trade tensions that blocked Nvidia from selling the H20 to China, a chip specifically designed to comply with export controls. The H20 export ban was later lifted, but Nvidia CFO Colette Kress said after Q3 earnings that demand from China “never materialized.”
Reports at the time suggested China discouraged or blocked major tech firms from buying foreign AI chips, steering them toward domestic alternatives.
H200 vs H20: A Very Different Chip
The H200 is considerably more powerful than the H20.
That matters because even if China was willing to shut the door on the H20, it may view the H200 differently if it believes access is necessary to keep up in the AI arms race.
But Reuters’ report suggests Chinese policymakers are still leaning toward restriction, at least for now.
A $54 Billion Opportunity Is Hanging in the Balance
Chinese customers have reportedly placed orders for more than 2 million H200 chips, which would represent a potential $54 billion sales channel for Nvidia if shipments actually flow.
Nvidia has been hoping to get H200s into China by around the Lunar New Year holiday on February 17, according to the report, but Chinese import restrictions could delay or derail that timeline.
This Matches the “Special Circumstances” Reporting
Reuters’ reporting lines up with a separate report from The Information this week, which said Chinese regulators told companies they could only buy H200 chips under “special circumstances.”
Bloomberg had previously reported China was preparing to approve imports for select commercial use as soon as this quarter, but the policy picture is clearly still fluid.
Bottom line: Nvidia $NVDA now has US export rules moving in its favor, but China appears to be tightening the gate on H200 imports anyway. For investors, the key issue is not demand. It is whether political approval becomes the real bottleneck.