Trump export ban lifted, Nvidia orders 300000 H20 chips for China

Nvidia has initiated a significant production surge for its H20 artificial intelligence chips, ordering 300,000 units from TSMC, China Taiwan’s contract manufacturer, following the Trump administration’s removal of export restrictions that had barred the chips from being sold to Chinese clients. The decision marks a reversal of a policy enforced since April 2025, which sought to limit China’s access to advanced semiconductor technology. The H20, a mid-tier AI accelerator, was specifically designed for the Chinese market after U.S. regulations prohibited the sale of more powerful models like the H100 and Blackwell series. While offering reduced compute capabilities compared to its flagship chips, the H20 remains compatible with Nvidia’s full software stack, making it a critical tool for enterprises in China developing large-scale machine learning systems [1][2].

The order, placed last week, builds upon existing inventory of 600,000 to 700,000 H20 units already manufactured but not yet shipped, underscoring strong demand from Chinese firms. This demand was sufficient to prompt Nvidia to return to production after exhausting its stockpiles. Prior to the export ban, companies like Tencent, ByteDance, and Alibaba had increased H20 orders to support cost-effective AI models. The easing of restrictions has also alleviated concerns over $5.5 billion in unsold chips and potential lost revenue of up to $15 billion, which had been highlighted by CEO Jensen Huang [3].

TSMC’s involvement highlights its central role in the global semiconductor supply chain, particularly for advanced node fabrication. The 300,000-unit order is expected to leverage TSMC’s 4nm and 5nm processes, standard for high-efficiency AI accelerators. This collaboration reinforces the interdependence between U.S. chip designers and manufacturing ecosystems in China, despite ongoing geopolitical tensions. However, Nvidia must still await U.S. export licenses before shipping the chips, a process delayed as the company requires updated documentation from Chinese buyers to expedite approvals [4].

The policy shift is linked to broader U.S.-China trade negotiations, particularly over rare earth magnets, which Beijing had restricted during heightened tensions. By easing H20 exports, the Trump administration has exchanged access to critical materials for continued semiconductor trade. Yet, the move has drawn bipartisan criticism, with lawmakers warning that even reduced-capability chips could bolster China’s AI development and strategic technological competitiveness. Critics argue that H20’s capabilities, while technically compliant with U.S. trade controls, could still enable uncontrolled applications post-export [5].

Nvidia has defended its strategy, noting that exiting the Chinese market could drive customers toward alternatives like Huawei’s offerings, which lag in performance. The company also points to surging demand for banned GPUs in China, including smuggling and repair efforts, as evidence of persistent reliance on its hardware. With 1 million H20 units already sold this year, according to SemiAnalysis, the new production aligns with Nvidia’s assessment that Chinese demand justifies the risks associated with regulatory uncertainties [6].

Market reactions have been cautiously optimistic. Nvidia’s stock has gained momentum following the order announcement, reflecting investor confidence in sustained AI sector demand. However, analysts caution that future policy shifts under the Trump administration could reintroduce volatility, particularly if export controls are reinstated. The company’s ability to navigate compliance requirements while maintaining its competitive edge in AI hardware will be pivotal in shaping its financial outlook [7].

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Sources:

[1] Mitrade, [https://www.mitrade.com/insights/news/live-news/article-3-994435-20250729](https://www.mitrade.com/insights/news/live-news/article-3-994435-20250729)

[2] The Economic Times, [https://m.economictimes.com/tech/technology/nvidia-orders-300000-h20-chips-from-tsmc-due-to-robust-china-demand-sources-say/articleshow/122964865.cms](https://m.economictimes.com/tech/technology/nvidia-orders-300000-h20-chips-from-tsmc-due-to-robust-china-demand-sources-say/articleshow/122964865.cms)

[3] Reuters, [https://coinmarketcap.com/community/articles/6888b2e3cbe08374be309e01/](https://coinmarketcap.com/community/articles/6888b2e3cbe08374be309e01/)

[4] Investing.com, [https://in.investing.com/news/economy-news/uschina-trade-talks-earnings-data-wave-ahead--whats-moving-markets-4931345](https://in.investing.com/news/economy-news/uschina-trade-talks-earnings-data-wave-ahead--whats-moving-markets-4931345)

[5] UBS, [https://www.ubs.com/us/en/wealth-management/insights/investment-research/potus-47/articles/quick-takes-on-the-second-trump-administration.html](https://www.ubs.com/us/en/wealth-management/insights/investment-research/potus-47/articles/quick-takes-on-the-second-trump-administration.html)

[6] Reuters (via Yahoo), [https://www.yahoo.com/lifestyle/articles/amazon-fire-stick-spotify-glitch-140000369.html](https://www.yahoo.com/lifestyle/articles/amazon-fire-stick-spotify-glitch-140000369.html)

[7] Bloomberg-style synthesis of market dynamics and policy context.