Trump says that Nvidia may sell the H200 chips to China, but nothing is guaranteed

On Monday, President Trump announced via Truth Social that he will approve the sale of Nvidia’s (NVDA) H200 chips to certain companies in China and other countries.

The move is positive for Nvidia, which has been lobbying for months for the administration to approve the sale of more powerful chips to the country.

But the response from investors and Wall Street more broadly has been rather muted. That’s because, as Deepwater Asset Management managing partner Gene Munster said, it all feels a bit like déjà vu.

In April, the United States banned the sale of Nvidia’s H20 chips to China, before approving exports of the processors in July. But instead of buying them, China held back, arguing that the chips could pose a security risk to local firms. The general thinking is that the maneuver was intended to push the Trump administration to allow Nvidia and its rivals to ship newer, non-degraded chips.

And there is no guarantee that the country will not do the same thing in an attempt to get the current top-of-the-line systems of Nvidia – the H200 is two generations behind the current B300 based on Blackwell.

Likewise there is no telling if the US will halt chip sales as a means of retaliating against China if the countries’ ongoing trade negotiations go south.

“Even though [an agreement gets] approval, it became clear that this was a negotiation job, and it could be thrown out anytime soon,” explained Munster.

“This is like investing 101 … you have to sleep well at night. And this is the exact opposite. You’re checking the time every hour here because you just don’t know if we’re going to be back on, off again.”

And then there is the question of whether members of Congress will try to block shipments of H200s and other high-end chips. Critics have long argued that China could use US chips to train AI systems for military uses.

The battle to get back into China is worth it for Nvidia from a financial perspective. CEO Jensen Huang said the country represents a total addressable market of about $50 billion.

And those projections were based on the company’s reduced chips. More powerful GPUs can get a bigger slice of AI sales. The only downside for Nvidia? Trump says that the AI ​​giant, and rivals, will have to pay the administration a 25% cut on the sale of chips destined for China. This is higher than the 15% originally planned by Trump.

Still, even with that 25% haircut, sales to China would benefit Nvidia.

“We’re going from zero at this point, so anything above zero is positive,” TECHnalysis founder and chief analyst Bob O’Donnell told Yahoo Finance. “Selling any chip in any quantity is a step up.”

Beyond the immediate revenue, Nvidia also benefits from shipping its chips to China by getting more AI researchers and developers to use its CUDA software platform, William Blair analyst Sebastien Naji wrote in a note to investors Monday evening.

CUDA allows customers to take full advantage of Nvidia chips for various AI processing needs, which also helps keep developers hooked on Nvidia products. This, Naji writes, could help offset some of the increased competition from China’s homegrown chip companies, including Huawei.

That’s all if China allows the sale to go ahead. In his Social Truth post, Trump said Chinese President Xi Jinping responded “positively” to the news about the H200 chip, but there are still too many unknowns about whether the sale will happen and, if it does, how long it will last.

Xi has been pressing Chinese tech companies to use domestic chips for their AI needs to ensure they don’t become dependent on US technologies. But experts say China’s chips still lag behind Nvidia’s latest and greatest in terms of performance.

“I’m just surprised that China would be positive about it, because they were saying no … just use chips made in China. And it looked like they were going to really stick to that,” O’Donnell said.

“And so it seems strange that they suddenly don’t stick with him. So it’s a little confusing.”

Even if all goes well between the Trump administration and China, members of Congress could still seek to halt chip shipments to the country. A number of lawmakers have raised concerns that selling advanced GPUs to China could give the country a military advantage by helping it develop new, more powerful AI algorithms.

According to the Wall Street Journal, new chips shipped to China will have to be passed from Taiwan, where they are manufactured, to the United States for a national security review before being sent to their final destination.

It is unclear, however, whether that will be enough to win over wary lawmakers.

Ultimately, investors may not begin to feel certain about the fate of Nvidia in China until several months after the first chips land in the country. If they are ever sent.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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