Trump Reverses AI Chip Ban, Saves Nvidia $8 Billion in China Sales
After months of high-stakes lobbying, Nvidia has secured a critical reprieve, reportedly receiving a license from the Trump administration to resume sales of its specialized AI chips to the lucrative Chinese market. This pivotal decision offers immense financial relief to the AI semiconductor giant, effectively averting a projected $8 billion revenue shortfall for the fiscal year. It also reopens access to a Chinese market that CEO Jensen Huang himself estimates could swell to $50 billion in the coming years.
The breakthrough, according to the Financial Times, materialized swiftly after Huang’s visit to the White House on August 6 to meet with President Donald Trump. Just two days later, the Commerce Department, the agency responsible for overseeing export controls, reportedly issued the initial licenses for Nvidia to sell its H2O chips in China.
This development marks the latest twist in the ongoing technological rivalry between the United States and China. At the heart of the U.S. government’s stringent export controls lies a deep-seated concern that advanced American technology could be leveraged by Beijing to develop sophisticated military AI capabilities. To counter this, Washington has imposed strict limitations, blocking the sale of top-tier AI chips to China.
Nvidia’s most powerful processors, such as those in its cutting-edge Blackwell series, remain subject to an outright export ban to China. In response to earlier restrictions, Nvidia ingeniously engineered the H2O chip – a less potent iteration of its advanced technology – specifically to adhere to the initial export regulations. However, the Trump administration adopted an even more rigorous stance in April, extending the ban to include these de-powered H2O chips. This escalated measure sent shockwaves through Nvidia, forcing the company to halt shipments and incur a substantial $4.5 billion charge for excess inventory and purchase obligations. By May, Nvidia had issued a stark warning to investors, projecting that these restrictions would cost the company an estimated $8 billion in revenue over the full fiscal year.
Reversing this policy demanded months of intense diplomacy and strategic lobbying, culminating in Huang’s personal appeals at the White House. The CEO’s renowned charm offensive appears to have profoundly altered President Trump’s perception of the company. During an AI summit held at the White House last month, Trump publicly admitted that he had initially contemplated initiating antitrust action against the chip behemoth before gaining a deeper understanding of its operations and leadership. “I said, ‘Look, we’ll break this guy up,’ before I learned the facts of life,” Trump recounted, referring to Huang during a speech. “I said, ‘Who the hell is he? What’s his name? What the hell is Nvidia? I’ve never heard of it before.’” The president continued, “Then I got to know Jensen, and now I see why,” subsequently inviting Huang, who was present in the audience, to stand. This pivotal encounter seemingly convinced the administration that safeguarding Nvidia’s financial health was paramount to preserving America’s competitive edge in the global AI landscape.
For Nvidia, this news represents a monumental relief. The company, which just last month achieved the unprecedented milestone of a $4 trillion market valuation, currently hovers around $4.45 trillion. With the $8 billion revenue threat now averted and the lucrative $50 billion Chinese market once again accessible, investors will be keenly observing Nvidia’s quarterly earnings report later this month. Another robust performance could easily propel the AI titan past the extraordinary $5 trillion threshold.
Nvidia and the Commerce Department did not immediately respond to requests for comment regarding these developments.