Source: Parth Sanghvi
Overview
NVIDIA Corporation (NASDAQ:NVDA) made a promising announcement on Monday that it will resume sales of its H20 GPU in China shortly. The decision follows the U.S. government’s assurance of granting export licenses, signaling a potential easing in trade restrictions between the two economic giants.
The news sparked investor optimism around NVIDIA’s restored China revenue, causing the company’s shares to surge 3.3% to $169.40 in extended trade.
Key Highlights
Jensen Huang, CEO of NVIDIA, confirmed during his visit to Beijing that applications are being filed to resume sales of the H20 chip. It’s noteworthy that these chip sales were previously blocked in 2025 due to trade disputes. The move signals a change in the company’s stance, suggesting a drive to rebuild business relations with China.
Moreover, the U.S. Department of Commerce is expected to grant export licenses following an easing in key trade restrictions. This will potentially pave the way for other semiconductor companies to revisit their business strategies in China.
As part of its re-engagement strategy, NVIDIA also unveiled a new GPU tailored for Chinese AI smart factories and logistics. This move underscores the company’s commitment to tap into the vast potential of the Chinese market.
Why It Matters
China has always been a significant market for NVIDIA, contributing to $17 billion in FY2025, which accounted for 13% of the company’s total revenue, according to company filings. NVIDIA had earlier anticipated up to $5.5 billion in charges due to the chip bans.
With tariffs easing and diplomatic engagement improving in May and June, NVIDIA—along with other semiconductor companies like Synopsys (NASDAQ:SNPS)—has regained a key growth trajectory in China. This development could potentially transform the semiconductor industry’s landscape and open new avenues for growth.
Market Outlook
The H20 chip, specifically designed to comply with Biden-era trade restrictions, has remained popular among top Chinese AI developers, including:
- Tencent
- DeepSeek
- Baidu (NASDAQ:BIDU)
- Alibaba (NYSE:BABA)
The ability of Nvidia to re-enter this market with regulatory approval significantly bolsters its near-term revenue potential and strengthens its global standing in the AI compute sector. This shift could potentially lead to a positive ripple effect across the industry, encouraging other companies to explore business opportunities in China.
Bottom Line
The green light for the H20 chip sale in China positions NVIDIA for a potential rebound in one of its key international markets. This development could reshape investor sentiment across the broader semiconductor sector, as it indicates a possible move toward more cooperative trade relations between Washington and Beijing.
In conclusion, the possible thawing of trade restrictions presents a significant growth opportunity for NVIDIA and other semiconductor companies. However, it remains to be seen how these developments will unfold and what impact they will have on the global semiconductor industry.