Nvidia Shares Surge as US Clears Path for H20 Chip Exports to China

Nvidia shares rose 4.4% after the company announced it expects to resume H20 GPU shipments to China shortly. The US government has assured Nvidia that licenses will be granted, and the company hopes to start deliveries soon. Analysts at Wedbush see the reversal of the ban as a "materially positive development" for Nvidia, which had indicated the ban would prevent them from shipping $8 billion in product in the July quarter. The resumption of sales by Nvidia and AMD to China is expected to boost revenues and gross margins temporarily. The broader memory sector and Taiwan Semiconductor Manufacturing Co (ADR) fabbing all of these products are also expected to benefit from the reopening of the China market.

Nvidia Corp. (NASDAQ: NVDA) shares rose 4.4% on July 2, 2025, following the company's announcement that it expects to resume H20 GPU shipments to China shortly. The U.S. government has assured Nvidia that licenses will be granted, and the company hopes to start deliveries soon. Analysts at Wedbush see the reversal of the ban as a "materially positive development" for Nvidia, which had indicated the ban would prevent them from shipping $8 billion in product in the July quarter [1].

The resumption of sales by Nvidia and AMD to China is expected to boost revenues and gross margins temporarily. The broader memory sector and Taiwan Semiconductor Manufacturing Co (ADR) (TSMC) fabbing all of these products are also expected to benefit from the reopening of the China market.

The decision to lift the export ban on the H20 chip marks a significant shift in U.S.-China trade relations. Nvidia CEO Jensen Huang has been vocal about the impact of export controls on American tech firms, arguing that losing the Chinese market would be a major setback [2]. The resumption of sales is expected to boost Nvidia's business and supply chain, as well as its market share in the Chinese AI chip market.

The H20 chip was designed to bypass earlier export controls and had been a key product in Nvidia's strategy to maintain its leadership in the AI hardware market. The resumption of sales aligns with a broader U.S.-China trade détente, which also includes China's relaxation of rare earth exports and U.S. approvals for resuming chip-design software services [2].

However, the resumption of H20 chip sales comes with its own set of challenges. The U.S. government has assured Nvidia that licenses will be granted, but the company has yet to start deliveries. Additionally, the long-term impact of the H20 chip's return remains uncertain, as China continues to invest heavily in its domestic chip production and AI frameworks [3].

Investors have reacted positively to the news, with Nvidia shares up 4.5% on trading platforms like Robinhood as of 12:20 a.m. ET. However, the long-term upside hinges on sustained AI demand and the company's ability to navigate ongoing geopolitical tensions.

The resumption of H20 chip sales is a step forward for Nvidia, but it also underscores the complex nature of U.S.-China trade relations. As the AI race continues, both technology and diplomacy will play crucial roles in determining the future of the global semiconductor industry.

References:
[1] https://www.cnbc.com/2025/07/15/nvidia-says-us-government-will-allow-it-to-resume-h20-ai-chip-sales-to-china.html
[2] https://www.ainvest.com/news/nvidia-return-china-catalyst-ai-semiconductor-growth-trade-policy-shifts-2507/
[3] https://www.goodreturns.in/news/jensen-huang-announces-u-s-approval-for-nvidias-h20-ai-chip-exports-to-china-1442751.html