US approves NVIDIA H200 chip exports to 10 Chinese firms, reversing sanctions

In a striking reversal of years-long export restrictions, the US White House approved NVIDIA to sell its most advanced H200 AI chips to 10 Chinese companies, removing a critical barrier that had kept China shut out of the latest US semiconductor capabilities. The approval came after President Trump's two-day summit with Xi Jinping in Beijing, where both leaders emphasized stabilizing ties despite broader tensions. The move is ostensibly a confidence-building gesture, though it also underscores how dependent the world's largest economies have become on each other's technology.

NVIDIA jumped 4.4% on the news, reflecting relief that the company can recapture roughly 25% of its revenue that had been dependent on Chinese sales before restrictions were imposed. The broader semiconductor sector also gained: AMD and Broadcom both trade in elevated territory as the chip rally extends. However, the geopolitical subtext is murky. Approving advanced exports while simultaneously conducting military exercises near Taiwan and supporting Ukraine contradicts a coherent China policy. As one observer noted, "We are bombing Iran while approving our most advanced chips to China while negotiating with Xi." This kind of strategic incoherence raises questions about whether the approval is durable or merely transactional.

The chip approval also intersects with broader trade negotiations. Trump told Xi that China should buy more US oil, and both sides claimed progress on agricultural purchases and infrastructure deals. Yet markets remained skeptical; Chinese equities failed to mount a sustained rally despite the summit optics. The yuan held steady, suggesting institutional investors are waiting for concrete commitments rather than rhetorical flourishes.

Semiconductor supply chains now face new complexity. Chinese competitors like Huawei can now access advanced US chips for their own AI inference and data-center buildout, potentially eroding NVIDIA's moatA sustainable competitive advantage that protects long-term returns on capital. faster than expected. If the White House approval signals a sustained policy shift toward commercial openness with China, the semiconductor industry may face margin pressure longer-term, even if near-term revenue benefits NVDA.