US Approves Nvidia's Resumption of AI Chip Sales to China Amid Rare Earths Talks

Nvidia has resumed AI chip sales to China as part of talks on rare earths. The company is the world leader in programmable graphics processors and develops associated software. Its net sales break down by family of products, including computing and networking solutions, graphics processors, laptops, desktops, gaming computers, computer peripherals, and software. Net sales are distributed geographically, with the US accounting for 44.3%, Taiwan for 22%, China for 16.9%, and other regions for 16.8%.

Nvidia has resumed sales of its AI chips to China as part of ongoing discussions regarding rare earths. The move is a strategic shift that reflects the company's efforts to maintain a competitive edge in the global semiconductor market. The decision comes after a period of uncertainty, during which Nvidia's H20 chip sales to China were halted by the Trump administration.

Commerce Secretary Howard Lutnick, speaking with CNBC's Brian Sullivan, explained that the administration's reversal was based on a strategy to sell Chinese companies enough AI chips so they become "addicted" to American technology. Lutnick emphasized that Chinese companies are receiving Nvidia's "4th best" chip, which is slower than the fastest chips available in the U.S. market [1].

Nvidia's CEO, Jensen Huang, has long advocated for continued sales to China, arguing that it prevents Chinese companies from investing in homegrown infrastructure. Huang also stated that the Chinese military would not use Nvidia chips, and that Chinese companies like Huawei are legitimate competitors [1].

The H20 chip, introduced in 2022, is based on the same technology as Nvidia's Hopper-generation chips but with some features removed to comply with export controls. Despite these limitations, the success of the DeepSeek R1 model suggests that there is substantial demand for these chips in China [1].

Nvidia's decision to resume sales aligns with its broader strategy of releasing new AI chips annually. The company's goal is to ensure that serious AI developers always have access to the latest and most powerful technology. The Blackwell chips, which include the GB200, B100, and B200 versions, are currently the best AI chips available, while the upcoming Blackwell Ultra and Vera Rubin chips are expected to further enhance Nvidia's AI capabilities [2].

Nvidia's geographic distribution of net sales shows a significant presence in China, with 16.9% of its sales coming from the region. This underscores the importance of the Chinese market to Nvidia's overall revenue. The company's net sales are distributed across various product families, including computing and networking solutions, graphics processors, laptops, desktops, gaming computers, computer peripherals, and software [2].

The resumption of sales to China is a significant win for Nvidia, which had previously faced challenges in accessing the Chinese market. The company had estimated that it could have sold $8 billion in H20 chips during the current quarter before sales were stopped [1].

References:
[1] https://www.cnbc.com/2025/07/15/howard-lutnick-says-china-is-only-getting-nvidias-4th-best-ai-chip.html
[2] https://www.investopedia.com/articles/markets/012216/worlds-top-10-semiconductor-companies-tsmintc.asp