Nvidia H200 Chip Sales to China Stuck in Regulatory Limbo

A Deal Announced But Not Delivered

Nearly two months after President Donald Trump publicly approved Nvidia's export of H200 artificial intelligence chips to China, not a single unit has shipped. What was presented as a landmark trade breakthrough in December 2025 has become mired in bureaucratic limbo on both sides of the Pacific.

The US Commerce Department formally revised its export rules in mid-January 2026, shifting licence reviews from a presumption of denial to a case-by-case basis. The new framework imposes strict conditions: a twenty-five percent tariff on exports, volume caps limiting China-bound sales to no more than half the chips sold to US customers, third-party security testing before shipment, and prohibitions on military use.

State Department Holds the Line

While the Commerce Department has completed its review, the State Department is pushing for tougher restrictions, creating an inter-agency tug-of-war that has effectively frozen the licensing process. The departments of Defence and Energy must also sign off before any export licences are granted, adding further layers of review.

Beijing's Balancing Act

China's response has been equally cautious. Beijing initially blocked H200 shipments arriving in Hong Kong in January, catching Nvidia off guard. Regulators have since granted conditional approvals to major tech firms including ByteDance, Alibaba, Tencent, and DeepSeek to collectively purchase over four hundred thousand chips, but final terms remain under review.

Beijing faces a strategic dilemma: importing superior American chips risks undermining its push to develop domestic alternatives through companies like Huawei, yet blocking imports would handicap its AI industry. Some regulators have asked firms to pair H200 purchases with commitments to buy domestically produced accelerators.

Massive Demand Meets Limited Supply

Chinese technology companies have expressed interest in more than two million H200 chips at roughly twenty-seven thousand dollars each, far exceeding Nvidia's available inventory of around seven hundred thousand units. Nvidia has responded by requiring full upfront payment with no refunds, shifting financial risk entirely to Chinese buyers. The company already absorbed a five point five billion dollar inventory write-down last year after the abrupt ban on its H20 chip.

Nvidia CEO Jensen Huang has said he hopes Beijing will grant approval, noting the US side is nearing completion of its process. AMD faces the same uncertainty, awaiting licences for its MI325X chip under the same framework.