Nvidia Can Sell Its H200 AI Chip to China—Will Beijing Want It?

Why China might push back against the H200

The H200 is Nvidia’s most advanced processor for training large language models and other compute‑intensive workloads. Yet China has been accelerating a “self‑reliance” agenda that prioritises domestic chip design, manufacturing, and AI stack development.

“Even though the restriction lift restores a potential sales channel for Nvidia, China’s strategic trajectory has already shifted,” said Neil Shah, partner at Counterpoint Research. “The country is rapidly building a home‑grown ecosystem that can operate without U.S. silicon.”

Nvidia CEO Jensen Huang noted in a recent interview that Huawei’s Ascend AI chips are “probably comparable” to the H200, underscoring the narrowing performance gap between U.S. and Chinese offerings. Huawei, along with Alibaba Baidu and a wave of startups, is aggressively expanding its AI‑chip portfolio, leveraging massive on‑premise chip clusters to achieve performance that rivals Nvidia’s flagship.

Domestic firms have also been drawing on inventory of pre‑ban Nvidia chips, blending them with locally produced semiconductors to create hybrid AI solutions. This has allowed Chinese cloud providers and AI labs to keep development momentum while the domestic supply chain catches up.

Shah added that relying on foreign chips carries “political risk” – any future policy reversal could leave Chinese operators with “a hanging sword of uncertainty.” For that reason, Beijing is likely to keep self‑sufficiency at the core of its long‑term AI strategy.

Reasons China could still buy the H200

Despite the push for domestic alternatives, several factors make the H200 an attractive option for Chinese tech giants:

• Performance lead: The H200 delivers a notable edge in raw compute and power efficiency over the older H100 and most indigenous designs, making it valuable for cutting‑edge model training.
• Supply constraints: China’s semiconductor supply chain continues to face shortages across wafer fabrication, packaging and testing. Industry insiders note that “there is a real shortage of advanced AI chips in the market right now.”
• Time‑to‑market pressure: Companies such as Alibaba and Baidu are racing to launch next‑generation AI services. Acquiring H200 units could accelerate product rollout while domestic solutions mature.

Analyst Ben Barringer of Quilter Cheviot observed, “The demand for H200 is likely to be strong because it offers a better performance‑per‑dollar ratio than the H100, and the overall chip shortage makes any high‑end supply valuable.”

Nonetheless, China still lags behind the world’s leading foundries. Taiwan Semiconductor Manufacturing Co. (TSMC) dominates the production of cutting‑edge nodes, and current export controls prevent Chinese firms from accessing the most advanced lithography equipment. This technological gap means that, for the foreseeable future, the H200 remains one of the few options capable of delivering the highest levels of AI compute.

Strategic outlook

The reopening of H200 sales could provide Nvidia with an estimated $1‑2 billion in incremental revenue over the next 12‑months, a welcome boost after a slowdown in other segments. However, analysts warn that this window may be short‑lived.

George Chen, partner and co‑chair of the digital practice at The Asia Group, explained, “China’s self‑reliance policy is a marathon, not a sprint. Even if Nvidia secures a foothold now, Beijing will continue to invest heavily in domestic chip design, fabrication and AI talent.”

In the near term, Chinese AI firms are likely to adopt a hybrid approach—leveraging the H200 for the most demanding workloads while simultaneously scaling home‑grown alternatives. Over the longer horizon (five to ten years), the gap between U.S. and Chinese AI hardware could narrow substantially, especially as China expands its ecosystem of AI‑optimized silicon, software frameworks, and data centers.

For investors, the key takeaway is that Nvidia’s exposure to China is re‑emerging, but it remains contingent on geopolitical dynamics and the speed of China’s domestic semiconductor progress. The H200 could be a lucrative, albeit temporary, revenue stream that underscores the broader tension between open‑market technology diffusion and national security imperatives.