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Dow Jones NewsDec 9, 9:27 PM UTC
DJ Nvidia's Re-Entry to China? It's Complicated. -- WSJ
By Dan Gallagher
This is an online version of the WSJ AI & Business newsletter, your guide to The Wall Street Journal's coverage of artificial intelligence. Get it in your inbox each week by signing up here.
Nvidia scored a notable win this week by finally getting permission to sell a relatively powerful AI chip into China. Investors aren't exactly cheering.
President Trump said Monday that the U.S. government will allow Nvidia to sell its H200 chip to approved customers in China. Nvidia has been effectively locked out of the Chinese AI market due to national-security concerns since early this year. Back then, the Trump administration had banned the sale of a chip called the H20. Nvidia had designed this specifically for China with severely downgraded performance specs meant to comply with export restrictions.
By comparison, the H200 is a fully functioning GPU chip designed for AI training-albeit one Nvidia has been shipping for more than a year. As such, it is well behind the state-of-the-art Blackwell chips the company now ships.
It is higher performing than the H20. So the Chinese government may have a harder time turning away the H200.
Chinese companies were effectively banned from using Nvidia's H20 even after the company won back approval to sell the chip in July. Homegrown AI chips were considered good enough relative to Nvidia's bottom-shelf offering. The H200, by contrast, is 12-18 months ahead of anything sold by Chinese chip companies, according to Mizuho analyst Vijay Rakesh.
The Chinese AI market is a big one; Nvidia CEO Jensen Huang believes it's worth about $50 billion a year. That would be a lucrative opportunity for the company, which still has a commanding lead in AI chips.
But investors yawned. Nvidia's stock price was actually traded down Tuesday following the news, given questions about Nvidia's ability to supply older chips and a 25% commission Trump said the company has to pay to the U.S. government for any H200 chips exported to China. And there's still a question about how the Chinese government will respond.
"While clearly a tailwind versus our and Street estimates, we are skeptical investors will give China-based revenue much 'credit' given the back and forth," TD Cowen analyst Josh Buchalter wrote in a report. Even for Nvidia, China's AI market remains far from a sure thing.
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December 09, 2025 16:27 ET (21:27 GMT)
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