U.S. Clears Nvidia H20 Sales to China

The U.S. Commerce Department has granted export licenses allowing Nvidia to resume sales of its China-specific H20 AI accelerator, lifting an April ban. The decision follows CEO Jensen Huang’s lobbying in Washington and clears a major obstacle to Nvidia’s presence in a critical market. Nvidia had applied for the licenses in July, anticipating approval.

The H20 chip was engineered to comply with U.S. export restrictions by reducing certain capabilities while remaining viable for AI inference and mid-scale training in Chinese cloud and enterprise sectors. Before the halt, major Chinese tech companies like Tencent, Alibaba, and ByteDance had expressed strong demand. Licensing now enables deliveries under stricter oversight.

For Nvidia, regaining access safeguards billions in potential revenue, buying time amid ongoing supply constraints in high-bandwidth memory (HBM) and advanced packaging. Analysts suggest the move is also tied to broader U.S.-China trade negotiations involving critical materials.

For China, the approval restores short-term access to capable, though not cutting-edge, AI hardware. Beijing continues to press for relaxed controls on HBM, a key enabler of large-scale AI, while state media questions the H20’s performance and security, reflecting both leverage tactics and dependency concerns.

Washington’s decision signals a pivot from blanket bans to targeted licensing, maintaining limits on China’s frontier AI capabilities while allowing de-rated products for commercial workloads. It also highlights a focus on enforcement and technology chokepoints like HBM, where any policy changes could significantly affect AI capacity.

Risks remain over license terms, Chinese regulatory scrutiny, and potential precedent for other U.S. chipmakers seeking similar permissions. The outcome will depend on monitoring compliance, future U.S. responses on memory exports, and how quickly Chinese firms place orders.

In essence, the H20 licensing offers Nvidia market stability and the U.S. bargaining leverage—without giving China unfettered access to frontier AI compute.