By Liam Mo, Anne Marie Roantree and Che Pan
BEIJING/HONG KONG (Reuters) -Chinese firms are scrambling to buy Nvidia’s H20 artificial intelligence chips, two sources told Reuters, as the company said it planned to resume sales to the mainland days after its CEO met U.S. President Donald Trump.
Nvidia’s AI chips have been a key focus of U.S. export controls designed to keep the most advanced chips out of Chinese hands over national security concerns. The U.S.-listed company has said the curbs would cut its revenue by $15 billion.
The world’s most valuable firm is filing applications with the U.S. government to resume sales to China of the H20 graphics processing unit (GPU), and expects to get the licences soon, Nvidia said in a statement.
“The U.S. government has assured Nvidia that licences will be granted, and Nvidia hopes to start deliveries soon,” said the company, whose chief executive, Jensen Huang, is visiting Beijing and set to speak at an event on Wednesday.
Rival AI chipmaker AMD also said it was informed by the U.S. Department of Commerce that licence applications to export its MI308 chips to China will be moving forward for review.
AMD, which has forecast a $1.5 billion revenue hit this year due to the U.S. export curbs, plans to resume shipments of these chips when licences are approved, it said in an emailed statement.
Shares of both Nvidia and AMD jumped 3.5% in morning trading.
“This is a major catalyst for Nvidia shares, as many had written off the chance of any meaningful revenue coming from China,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
The White House, which has previously expressed concern that the Chinese military could use AI chips to develop weapons, did not respond to a request for comment.
Chinese companies have scrambled to place orders for the chips, which Nvidia would then need to send to the U.S. government for approval, the sources familiar with the matter said. They added that internet giants ByteDance and Tencent are in the process of submitting applications.
Central to the process is a approved list put together by Nvidia for Chinese companies to register for potential purchases, one of the sources said.
ByteDance and Tencent did not respond to a request for comment. Nvidia declined to comment on the approved list system.
Nvidia, which has criticised the export curbs the Trump administration imposed in April that stopped it from selling its H20 chip in China, also said it has introduced a new model tailored to meet regulatory rules in the Chinese market.
Huang is set for a media briefing in Beijing on Wednesday when he attends a supply chain expo. The Nvidia CEO also visited China in April and stressed the importance of the Chinese market.
“The Chinese market is massive, dynamic, and highly innovative, and it’s also home to many AI researchers,” Huang told Chinese state broadcaster CCTV on Tuesday.
“Therefore, it is indeed crucial for American companies to establish roots in the Chinese market.”
Asked at a regular foreign ministry briefing in Beijing about Nvidia’s plans to resume AI chip sales, a spokesperson said, “China is opposed to the politicisation, instrumentalisation and weaponisation of science, technology and economic and trade issues to maliciously blockade and suppress China.”
SUPPLY CHAIN
Nvidia has faced increased competition from Chinese tech giant Huawei and other makers of GPUs – the chips used to train artificial intelligence. But Chinese companies, including big tech firms, still crave Nvidia chips for its computing platform known as CUDA.
Huang’s visit is being closely watched in both China and the United States, where a bipartisan pair of senators last week sent the CEO a letter asking him to abstain from meeting companies working with military or intelligence bodies.
The senators also asked Huang to refrain from meeting with entities named on the United States’ restricted export list.
The move to resume sales of the H20 chips comes amid easing tensions between Washington and Beijing, with China relaxing controls on rare earth exports and the United States allowing chip design software services to restart in China.
“The uncertainties between the U.S. and China remain high and despite a pause in H20’s ban, Chinese companies will continue to diversify their options to better protect their supply chain integrity,” said He Hui, research director of semiconductors at Omdia.
The H20 chip was developed specifically for the Chinese market after U.S. export curbs imposed on national security grounds in late 2023. The AI chip was Nvidia’s most powerful legally available product in China until it was effectively banned by Washington in April.
The H20 ban forced Nvidia to write off $5.5 billion in inventories, and Huang told the Stratechery podcast that the company also had to walk away from $15 billion in sales.
But now, the possibility of new licences could represent about $15 billion to $20 billion in additional revenue this year, depending on when the approval is granted and how quick the deliveries can ramp back up, said Hargreaves’ Britzman.
“There’s also a chance Nvidia can reverse some, or all, of the $5.5 billion impairment charge taken in the first quarter, providing a double boost for earnings.”
Nvidia also announced the development of a new AI chip designed specifically for China, called the RTX Pro GPU.
The company described it as “fully compliant” with U.S. export controls and suitable for digital twin AI applications in sectors, such as smart factories and logistics.
In May, Reuters reported Nvidia was preparing to launch in China a new AI chip, based on the RTX Pro 6000D, at a significantly lower price point than the H20.
The graphics processing unit would be part of Nvidia’s latest generation Blackwell-architecture AI processors and was expected to be priced well below the H20 for its weaker specifications and simpler manufacturing requirements, sources said.
China generated $17 billion in revenue for Nvidia in the fiscal year ending January 26, or 13% of total sales, based on its latest annual report. Huang has consistently highlighted China as a critical market for Nvidia’s growth.
(Reporting by Liam Mo and Che Pan in Beijing, Anne Marie Roantree in Hong Kong, Surbhi Misra, Arsheeya Bajwa and Akriti Shah in Bengaluru and Trevor Hunnicutt in Washington; Editing by Saad Sayeed, Clarence Fernandez, Shinjini Ganguli and Louise Heavens)
