US authorises Nvidia $NVDA H20 chip exports to China; potential $2-4bn boost

The granting of US export licenses for Nvidia’s advanced chips to China marks a pivotal shift in the semiconductor landscape, potentially unlocking billions in revenue for the AI giant amid ongoing geopolitical tensions. This development, emerging just as trade frictions appeared entrenched, underscores how high-level lobbying and policy reversals can reshape market access for tech leaders reliant on the world’s largest consumer base for computing hardware.

Reversing the Ban: A Timeline of Restrictions and Relief

Only months ago, in April 2025, the US imposed stringent limits on Nvidia’s H20 chips, effectively barring their sale to China under tightened export controls. This move, part of broader efforts to curb technological transfers amid national security concerns, echoed earlier Biden-era rules but intensified under the Trump administration. Now, with licenses reportedly issued following a direct meeting between Nvidia CEO Jensen Huang and President Trump, the reversal could restore a critical revenue stream. Historical data shows China accounted for roughly 20-25% of Nvidia’s total revenue in fiscal 2024, per company filings, before restrictions bit into that figure. The H20, a toned-down version of Nvidia’s flagship AI accelerators designed to comply with prior rules, had been caught in limbo, but this licensing green light suggests a pragmatic thaw—albeit one that might come with strings attached, such as limits on volumes or end-use monitoring.

Investors should note that this is not a blanket approval. According to reports from Reuters and the Financial Times, the Commerce Department has begun issuing these licenses selectively, focusing on the H20 model while maintaining bans on more powerful variants like the A800 or H800. This calibrated approach could limit the upside, yet it still positions Nvidia to recapture market share in China’s booming data centre and AI sectors, where domestic alternatives from Huawei and others have gained ground but lag in performance.

Financial Implications: Revenue Boost Amid Valuation Pressures

From a financial standpoint, reinstated access to China could bolster Nvidia’s top line, which has seen explosive growth but faces headwinds from diversified competition. Trailing twelve-month revenue stood at approximately $96 billion as of the latest quarter ending May 2025, with data centre sales—Nvidia’s powerhouse segment—surging 427% year-over-year in the prior period. Analysts at firms like Goldman Sachs estimate that full China re-entry might add $2-4 billion annually to that figure, assuming licenses scale up without new hurdles. This comes at a time when Nvidia’s forward P/E ratio hovers around 44, based on consensus EPS forecasts of $4.12 for the next fiscal year, reflecting optimism but also vulnerability to policy whims.

Market reaction has been telling: Nvidia’s shares closed at $182.70 on Nasdaq, up about 1% from the previous session’s $180.77, with intraday highs touching $183.29. This modest gain, amid a session volume of over 121 million shares—below the 10-day average of 161 million—suggests cautious enthusiasm. It is a far cry from the volatility seen in April, when news of the initial H20 restrictions shaved nearly 10% off the stock in a single week, dropping it from around $140 to below $130. Working backwards, the 52-week high of $183.88, achieved recently, implies the market had already priced in some regulatory relief, but sustained upside will depend on actual shipment volumes and any reciprocal moves from Beijing.

Geopolitical Risks and Strategic Manoeuvring

Beyond the numbers, this licensing episode highlights Nvidia’s delicate balancing act in a fractured global supply chain. The company’s statement in April, via CNBC, affirmed compliance with export laws “to the letter,” even as it lamented the trade deficit impact of lost sales. Now, with approvals in hand, Nvidia has publicly rejected any inclusion of “back doors” or kill switches in its products, as reported by The Washington Post, addressing suspicions from both US and Chinese sides. This stance could ease adoption in China, where state-backed entities have pushed for self-reliance, yet it also invites scrutiny if tensions escalate anew.

Sentiment from verified sources leans positive but guarded. Bloomberg Intelligence analysts rate the development as a “strong buy” catalyst, citing potential for 15-20% revenue growth acceleration in Asia-Pacific if licenses expand. Conversely, Morningstar cautions that ongoing US charges against illicit chip shipments—such as the August 2025 case involving two Chinese nationals smuggling Nvidia tech, per CNBC—signal enforcement risks that could undermine the licenses’ longevity.

Competitive Landscape and Long-Term Outlook

In the broader AI chip arena, this export nod could blunt the edge of rivals like AMD and Intel, who face similar barriers, while giving Nvidia a head start in tailoring products for China’s market. The unveiling of a new Blackwell-inspired GPU for China, as noted in Data Center Dynamics reports, aligns with this timing, suggesting Nvidia’s R&D has anticipated such openings. Model-based forecasts from CFRA Research project Nvidia’s EPS reaching $4.31 for the current year, up from $3.12 trailing, factoring in partial China recovery—but these assume no major policy backslides.

Yet, investors must weigh the irony: while licenses promise relief, they stem from a reversal that followed Huang’s White House lobbying, per Financial Times sources. This personal intervention underscores how executive access can sway outcomes, but it also exposes Nvidia to political volatility. If US-China relations sour further—perhaps over Taiwan or trade tariffs—these licenses could evaporate as quickly as they appeared, echoing the 2023 bans on A800 chips that caught the market off-guard.

Investor Considerations Moving Forward

For portfolios heavy on tech, this export breakthrough merits close monitoring ahead of Nvidia’s earnings on 27 August 2025. Key watchpoints include guidance on China-derived revenue, which plummeted to under 10% in the restricted quarters, and any commentary on license volumes. At a market cap exceeding $4.4 trillion, Nvidia’s valuation demands consistent execution; this development aids that, but it is no panacea in a world where chips are as much weapons as commodities.

In a landscape where silicon fuels superpowers, these licenses represent more than commerce—they’re a geopolitical chess move. Nvidia stands to gain, but only if the board does not flip.

References

CNBC. (2025, April 16). Nvidia ‘follows export laws to the letter’ after China chip sales end. Retrieved from https://www.cnbc.com/2025/04/16/nvidia-follows-export-laws-to-the-letter-after-china-chip-sales-end.html

CNBC. (2025, August 6). Two Chinese nationals charged for illegally shipping Nvidia AI chips to China. Retrieved from https://www.cnbc.com/2025/08/06/two-chinese-nationals-charged-for-illegally-shipping-nvidia-ai-chips-to-china.html

Computer Weekly. (2025). AI chip restrictions limit Nvidia H20 China exports. Retrieved from https://www.computerweekly.com/news/366622857/AI-chip-restrictions-limit-Nvidia-H20-China-exports

Data Center Dynamics. (2025). US agrees to grant Nvidia H20 export licenses as chipmaker unveils new Blackwell-inspired GPU for China. Retrieved from https://datacenterdynamics.com/en/news/us-agrees-to-grant-nvidia-h20-export-licenses-as-chipmaker-unveils-new-blackwell-inspired-gpu-for-china

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NPR. (2025, April 16). Nvidia, China and the U.S. government’s H20 chip restrictions. Retrieved from https://www.npr.org/2025/04/16/nx-s1-5366665/nvidia-china-h20-chips-exports

Reuters. (2025). US licenses Nvidia to export chips to China, official says. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3U02JL:0-us-licenses-nvidia-to-export-chips-to-china-official-says/

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