Nvidia to resume H20 chip sales to China in rare earths trade deal

Just months after Washington tried to cut off China’s AI computing supply, the gate is swinging open again.

Nvidia announced late Monday that it is applying for export licenses to resume shipments of its China-tailored H20 chips, noting the U.S. government gave assurances they would be approved soon. Shares jumped 4%, while rival AMD gained over 5.6% as its scaled-down MI308 GPU also awaits Commerce Department review.

The art of the rare earth deal

This dramatic reversal is less about chip policy and more about raw material leverage.

U.S. Commerce Secretary Howard Lutnick confirmed Tuesday that the H20 approval is tied directly to trade negotiations on rare earth minerals. "We put that in the trade deal with the magnets," Lutnick said, referring to talks aimed at restarting Chinese shipments of rare earth metals halted in March. The news followed a private meeting last week between Nvidia CEO Jensen Huang and President Donald Trump.

Back in April, the Commerce Department slapped special licensing requirements on scaled-down GPUs, effectively blocking H20 sales. Nvidia estimated the ban would wipe out $15 billion in revenue, having previously booked $17 billion in China sales during its last fiscal year. Reopening the pipeline could deliver a $15 billion to $20 billion boost this year, according to investment firm Hargreaves Lansdown.

Nvidia also teased a new "fully compliant" GPU called the RTX PRO for industrial digital twins, designed to sit comfortably below Washington's restriction thresholds.

Scramble in Shenzhen, fury on Capitol Hill

News of the restart sparked an immediate buying rush across the Pacific.

Sources told Reuters that Chinese tech firms are scrambling to secure H20 orders, with Nvidia setting up a registered buyer list. While ByteDance denied submitting orders and Tencent didn’t comment, appetite remains sky-high. Even though the H20 runs significantly slower than the flagship H100, its golden ticket is compatibility with Nvidia's CUDA software stack.

Meanwhile, lawmakers in Washington are livid. Representative Raja Krishnamoorthi called the reversal "dangerously inconsistent," while House China Committee Chair John Moolenaar pointed out that H20 chips were instrumental in the rise of DeepSeek, which built frontier-class models at a fraction of OpenAI's budget. Beacon Global Strategies expert Divyansh Kaushik warned that if Chinese firms acquire one million H20s, it could significantly close or even erase the U.S. AI lead.

Why it matters

In our view, swapping AI compute for rare earths highlights the uncomfortable reality of chip bans: software moats and raw materials will always complicate ideological embargoes.

For Chinese developers and cloud giants, the H20's return is an immediate relief valve. It saves engineering teams from the painful overhead of porting large workloads to unproven domestic accelerators. But it also remains a temporary fix. Nobody can build a five-year infrastructure plan on hardware that doubles as a geopolitical trading chip.

For Nvidia, Jensen Huang executed a brilliant defensive play. Huang has warned that choking off China only accelerates Huawei's domestic ascension. By keeping the H20 on the table, Nvidia maintains its software chokehold over Chinese AI engineers and secures billions in high-margin revenue. The catch? Washington has now established that export controls are negotiable, turning tech sovereignty into a transactional bazaar.