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NVIDIA (NVDA) announced in an email to investors that it expects to resume sales of its H20 AI chip to China “soon,” marking a significant development after the U.S. government-imposed export controls in mid-April 2025, citing national security concerns. The H20 chip was specifically engineered for the Chinese market to comply with initial U.S. export restrictions implemented in 2022, which barred NVDA’s more advanced AI chips, such as the H100, from being sold in China. However, the Trump administration tightened these restrictions in April 2025, requiring export licenses for the H20 and any chips with equivalent memory bandwidth, effectively halting sales.

• This announcement, which has ignited a sharp rally in NVDA today, coincides with CEO Jensen Huang’s high-profile visits to Beijing and Washington. In Beijing, Huang met with senior Chinese officials and industry leaders to discuss AI’s benefits and NVDA’s commitment to the Chinese market, while in Washington, he engaged with President Donald Trump to reaffirm NVDA’s support for U.S. job creation and AI leadership.
• Huang’s use of the term “soon” suggests that H20 sales could resume in 3Q25, following assurances from the U.S. government that export licenses will be granted, likely facilitated by a recent U.S.-China trade framework that eased tech export curbs in exchange for China relaxing rare-earth export controls. This diplomatic progress, coupled with Huang’s strategic engagement, positions NVDA to swiftly re-enter the $50-$60 bln Chinese AI market.
• The halt of H20 chip sales in mid-April had a material impact on NVDA’s financials in 1Q25. The company recorded a $4.5 bln charge related to H20 inventory that could not be sold or repurposed, reflecting the abrupt nature of the export restrictions with “no grace period.” Additionally, NVDA was unable to ship $2.5 bln in H20 chips it had already produced, though it managed to book $4.6 bln in H20 sales to China before the controls took effect.
• Had the full $7.1 bln in H20 orders been fulfilled, these sales would have accounted for approximately 16% of NVDA's Q1 revenue of $44 bln. The company also projected an additional $8 bln in lost H20 sales for Q2, underscoring the significant financial toll of the restrictions and the importance of resuming sales to mitigate further losses.
• In the same announcement, Huang introduced the RTX PRO GPU, described as “fully compliant” with U.S. export controls and “ideal for digital twin AI for smart factories and logistics.” This chip targets China’s growing demand for AI applications in industrial automation, where digital twins -- virtual models of physical systems -- enable real-time optimization of manufacturing and supply chain processes. The RTX PRO’s focus on smart factories and logistics aligns with China’s push for Industry 4.0, potentially serving major players like ByteDance and Tencent, who are investing heavily in AI-driven operations.
• However, the RTX PRO’s reportedly inferior performance compared to the H20 may limit its competitiveness, and its lower price point, based on simpler manufacturing requirements, suggests it is unlikely to significantly offset the revenue potential of H20 sales.

NVDA’s expected resumption of H20 chip sales to China is a bullish turn of events, removing a key overhang that has weighed on the stock since April’s export restrictions. With the Chinese market open for business again, NVDA is well-positioned to recapture lost revenue and reinforce its dominance in AI chip technology.