Introduction to the Situation

Nvidia has been granted permission to continue selling its H20 graphics processing units in China, as reported by NPR. This development comes after Nvidia’s CEO, Jensen Huang, attended a dinner at Mar-a-Lago, which cost $1 million per head. Although it is unclear whether Huang spoke with President Trump, the outcome of the visit is seen as a significant win for Nvidia.

Previous Plans and Restrictions

The White House had been planning to implement restrictions on the sale of H20 chips in China, with the ban potentially coming into effect within days. However, following Huang’s visit, these plans appear to have been put on hold. NPR reports that Huang offered to invest more in U.S. AI data centers, a move that comes at a time when Microsoft is pulling back and tariffs threaten to increase construction costs.

Context of Nvidia’s Relationship with China

The United States already restricts the export of Nvidia’s advanced H100 chips to China due to concerns over the country’s development of AI for warfare and mass surveillance. China has a history of brutally repressing its citizenry, particularly the Uyghur ethnic minority. Despite these concerns, Nvidia has managed to convince the government to allow the sale of chips with reduced performance, including the H20, as China is a significant market for the company.

Significance of the Chinese Market for Nvidia

The importance of China to Nvidia’s business cannot be overstated. According to The Information, Chinese firms purchased $16 billion worth of H20 chips in the first three months of 2025, anticipating an impending ban. In this context, the $1 million spent by Huang for the dinner can be seen as a worthwhile investment for potential sales of $16 billion.

Nvidia’s Approach to China

Similar to Apple and its CEO Tim Cook, Huang has been cautious in his approach to China. Early this year, he made a discreet visit to the country, where he emphasized China’s role in Nvidia’s growth. Huang noted that over 1.5 million developers in China use CUDA, Nvidia’s software toolkit for training AI on its chipsets. Nvidia has collaborated with more than 3,000 startups in the country, and Huang expressed pride in the company’s contribution to the modernization of China’s dynamic market.

Impact of Export Restrictions

Export restrictions on China have had a mixed impact. While they may slow the country’s advancements in weaponry or surveillance, the technology industry in China has become adept at making its models more efficient, achieving more with less. The development of DeepSeek R1, a lightweight AI model built in just two months with less than $6 million, is a prime example of this. The company used compliant H800 chips to train the model.

The H20 Chip and Its Applications

The H20 chip is particularly well-suited for inference tasks, such as the reasoning technique initiated by OpenAI’s o1 and DeepSeek’s R1 models. This capability makes the H20 chip a valuable asset for companies operating in China.

Other Companies’ Experiences

Huawei, another major technology company, has also found opportunities in the face of export restrictions. After being restricted from accessing Western-made processors and software, Huawei unveiled its first smartphone with a homegrown chip and operating system last year. This achievement demonstrates the company’s ability to adapt and innovate in response to challenges.

The Broader Implications

The success of Nvidia’s CEO in securing permission to continue selling H20 chips in China raises questions about the effectiveness of export restrictions and the willingness of the Trump administration to enforce them. The move is seen as another example of how easily the administration can be influenced, with many other technology leaders having made similar pilgrimages to Mar-a-Lago without achieving the same outcomes. Meta, for instance, continues to face an upcoming FTC antitrust trial despite large donations and repeated visits by Mark Zuckerberg to curry favor with President Trump.

Conclusion

The decision to allow Nvidia to continue selling H20 chips in China, despite initial plans to restrict these sales, highlights the complexities of the relationship between the U.S. technology industry and China. While concerns over China’s use of AI for surveillance and warfare are valid, the ability of Chinese companies to adapt and innovate in response to export restrictions complicates the issue. The move also underscores the influence that major corporations can have on policy decisions, raising questions about the priorities of the Trump administration and its willingness to enforce restrictions on China.