US Approves H200 Chip Sales to China: NVDA, AMD Rally on Geopolitical Pivot

In a sharp reversal of semiconductor export policy, the US approved sales of Nvidia's H200 chips to a limited set of Chinese companies on May 15, marking a significant geopolitical thaw in the midst of ongoing tensions. The move surprised markets because it came during heightened Iran conflict rhetoric and represents the first major relaxation of AI chip export controls since the Biden-era restrictions. NVDA surged 4.4% on the intraday approval, with AMD also receiving relief from the sector rotation that had pressured both names earlier in the week.

The approval restores access to a revenue stream that analysts estimate represented as much as 25% of Nvidia's total sales in prior years. The 10 approved Chinese companies span cloud infrastructure, research, and manufacturing, suggesting the US government is calibrating restrictions to allow commodity-grade AI compute while maintaining controls on cutting-edge military-grade architectures. For semiconductor valuations, the policy shift removes tail-risk discount that had previously plagued mega-cap chipmakers whenever China relations deteriorated.

However, the narrative carries geopolitical baggage. Markets noted the cognitive dissonance of approving advanced chip sales to China while simultaneously conducting air operations against Iran and negotiating Taiwan's status with Xi Jinping. Some observers flagged that the approval may have been part of broader Trump-Xi summit negotiations, raising questions about the durability of the policy if trade talks deteriorate. Near-term, the news sent AMD and NVDA higher, but the semiconductor sector remains sensitive to any renewed US-China tensions.

The broader implication is that semiconductor supply-chain anxiety may be receding, which could reduce hedging demand for competing fab capacity and favor the integrated-design players (NVDA, AMD) over foundry peers. TSLA, which relies on NVIDIA compute for autonomous-driving development, also benefited from reduced geopolitical uncertainty around AI chip availability.