Trump Approves Nvidia H200 Sales But Will China Actually Buy?

 🌟🌟🌟While Trump has recently approved the sale of Nvidia's H200 chips to "approved customers" in China, I believe that the impact on $NVIDIA(NVDA)$  sales to China, will likely be limited in the near term.

Why US Approval Has Limited Impact 

China's Prioritisation of Domestic Chips:  The Chinese government has a strategic goal of technological self sufficiency and actively encourages local companies to use domestic alternatives, such as those made by Huawei.

Chinese authorities are discussing an approval process to limit access to the H200, requiring buyers to justify why a domestic supplier cannot meet their needs.

Previous Precedent : A similar situation occured earlier in 2025 with the H20, a less powerful chip designed for the Chinese market.  Although the US initially approved the sales, the Chinese government discouraged local companies from purchasing it, leading to very low demand and a significant negative impact for Nvidia.

Market Share Erosion: Analysts estimate that Chinese local chip suppliers could capture as much as 60% of China's AI chips spending this year, demonstrating a shift in the market away from foreign suppliers.

China's Domestic Rivals Surge as Nvidia's popularity wanes:  While Nvidia CEO Jensen Huang has previously lamented that the company's market share in China has fallen from 95% to virtually zero % due to export controls , Chinese chipmakers have rapidly filled the void.  The recent market success of these local alternatives underscores the difficulty in the scale of Nvidia's reentry into China.

Moore Threads $Moore Threads Technology Co.,Ltd.(688795)$ , a startup founded by a former Nvidia executive provides a powerful illustration of this shift .

Blockbuster IPO :  On December 5 25, Moore Threads debuted on the Shanghai Market and its shares soared 425% on the first day, raising about USD 1.13 billion .

This record breaking IPO highlights the immense investor confidence in domestic Chinese chip technology, even though it is currently unprofitable and its technology is considered behind Nvidia's most advanced chips.

Government Backing : The success of Moore Threads is a direct result of China's strategy to foster home grown alternatives.  Chinese regulators have fast tracked IPO approvals for semiconductor firms and actively discouraged the use of foreign chips in state funded data centers, effectively creating a protected market for local players. 

Concluding Thoughts 

Nvidia should not pin too much hope on the recent USD approval for H200 sales to China to meaningfully impact its overall financials.  Instead Nvidia's success is driven by its ability to sell its advanced chips to a global market , with a strong emphasis on the data centre segment for AI development.

Nvidia's key revenue driver is in its data centre dominance.  In the 3rd quarter of fiscal year 2026, data centre revenue was a record USD 51.2 billion , a massive increase of 66% year over year.

Nvidia has a strong outlook beyond China from global demand for its Blackwell chips and Rubin revenue through to 2026 with revenue amounting to over USD 500 billon.  Note that there is no H20 shipments to China with that projection.

While Data Centre segment is dominant , other areas like Gaming (USD 4.3 billion in Q3 FY26 revenue), and Automotive are also growing and contributing to Nvidia's overall resilience.

It is heartening to note that Nvidia's core strategy is focused on continuing to meet the overwhelming global demand for AI infrastructure.  This ensures that its growth is largely independent of the unpredictable Chinese market for its most advanced chips.

To sum it up in a nutshell: While the approval from Trump Administration is a positive directional change for Nvidia, it does not remove the significant political and regulatory hurdles from China.

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