U.S. approves H200 chip exports to 10 Chinese firms; NVDA jumps 4.4%

In a surprise regulatory reversal, the U.S. Department of Commerce approved the export of Nvidia's H200 chips to a curated list of 10 Chinese companies, marking a significant thaw in tech trade restrictions between the two superpowers. Nvidia stock jumped 4.4% on the announcement, reflecting the market's recognition that China, once representing 25% of Nvidia's total revenue, is poised to become a material contributor again after years of export controls and uncertainty. The decision comes just days after President Trump's summit with Xi Jinping in Beijing, signaling that the administration is pursuing a more selective, deal-oriented approach to tech trade rather than blanket bans.

The approval is stunning given the geopolitical backdrop: the U.S. is simultaneously bombing Iran, negotiating with China on trade and strategic competition, and racing to maintain technological superiority. The optics are jarring, as one market observer noted. Yet the commercial logic is straightforward for the Trump administration: Nvidia's AI dominance is being challenged by Chinese alternatives like Huawei, and cutting off the China market entirely may simply accelerate Beijing's own chip development. By allowing limited sales, the U.S. maintains leverage and keeps Nvidia revenues flowing while signaling to Beijing that cooperation on trade can yield dividends.

The broader semiconductor complex has also benefited. AMD, Broadcom, and other chip designers have tentatively gained as traders price in a potential broadening of export approvals. However, the move has sparked debate: some view it as pragmatic mercantilism, while others argue it undermines the strategic rationale for restricting Chinese access to cutting-edge AI hardware. Nvidia's CEO Jensen Huang was photographed in Beijing eating noodles, underscoring the cultural diplomacy underway.

The risk to the narrative is twofold. First, U.S. lawmakers from both parties have grown skeptical of what they see as appeasement toward China; expect congressional pushback and potential future restrictions. Second, the approvals could be reversed or narrowed if geopolitical tensions spike (e.g., Taiwan crisis). For now, the market is pricing in sustained market access, but Nvidia investors should monitor both Capitol Hill sentiment and Beijing's actions closely.