In mid-July 2025, the US government officially lifted its ban on Nvidia’s H20 AI chip exports to China. The original ban, put in place over national security concerns, had blocked sales of these advanced chips. But after months of trade negotiations—especially around rare-earth minerals—the ban was reversed, and Nvidia can now apply for export licenses again.
The H20 is Nvidia’s fourth most powerful AI chip, sitting below top models like the H100 and B200.
Why It Matters; Financially
Nvidia had estimated it lost around $10 to $15 billion in sales and wrote off another $5.5 billion in inventory due to the ban. Now that exports have resumed, the company could recover $15 to $20 billion in the coming months.
The market responded quickly—Nvidia's stock jumped by about 4%, hitting a new record high. Other chipmakers like AMD and TSMC also saw gains. Analysts at six major firms raised Nvidia’s stock targets, predicting a full recovery by late 2026 and strong growth through 2027.
Growing Demand in China
To keep up with surging demand in China, Nvidia has placed a new order for 300,000 H20 chips with TSMC. Big Chinese tech companies—including Tencent, Alibaba, ByteDance, and DeepSeek—are rapidly using up stockpiles, estimated at 600,000 to 700,000 chips.
Security Questions
However, the decision isn’t without concern.
China’s main internet watchdog, the Cyberspace Administration (CAC), has raised alarms about potential “backdoors” in the H20 chips—features like remote shutoff and location tracking, which are part of US export rules. Nvidia says the chips are secure and denies any wrongdoing.
Meanwhile, US analysts have flagged attempts by China’s People’s Liberation Army (PLA) to buy restricted chips through fake companies, raising national security questions as the exports resume.
Smuggling - Still a Problem
Even during the ban, over $1 billion worth of high-end Nvidia chips like the B200, H100, and H200 were reportedly smuggled into China between April and June 2025. Enforcement of the ban clearly wasn’t airtight.
A booming underground repair industry has also popped up in Shenzhen, where smuggled chips are fixed and reused—costing buyers between $1,400 and $2,800 per unit.
Quick Facts
| Category | Details |
|---|---|
| Policy Shift | Ban on Nvidia’s H20 exports lifted in July 2025 |
| Chip Affected | Nvidia H20—approved for export, but not as powerful as H100/B200 |
| Losses | $10–15B in lost sales + $5.5B in unused chips |
| Revenue Outlook | $15–20B possible recovery; stock rose ~4% |
| Chinese Demand | New 300K order; stockpile estimated at 600K–700K chips |
| Security Concerns | Chinese regulators probing chip safety; PLA interest in banned models |
| Smuggling Market | $1B+ in chips smuggled; underground chip repair scene is growing fast |
What It Means... Going Forward
For Nvidia and Rivals
Nvidia is back in one of its biggest markets, and this could be a major revenue boost. Competitors like AMD may also benefit, though to a lesser extent—its MI308 chip exports might now bring in about $1.5B.
For US–China Trade
This decision is closely tied to trade talks, especially over China’s exports of rare-earth minerals, which are vital for electronics. Some experts say this weakens US leverage for future tech restrictions.
For Enforcement
The smuggling issue shows the US needs better ways to enforce export bans. New laws like the proposed Chip Security Act could require tracking chips after they’re sold to ensure they don’t end up where they shouldn’t.
For China’s Tech Industry
Chinese companies now have better access to powerful AI hardware, which will help their development. But since the H20 isn’t as powerful as Nvidia’s top chips—and because of ongoing trust issues—they’re also likely to keep investing in homegrown alternatives.
Bottom Line
The US lifting its ban on Nvidia’s H20 chips marks a major change in tech trade between the two countries. While it's a big win for Nvidia financially, it also opens the door to new concerns about security, enforcement, and long-term global competition in AI.