Trump Lets Nvidia Sell H200 Chips to China for 25% Revenue Cut
TL;DR
President Trump announced on December 8, 2025, that Nvidia can resume selling H200 chips to China in exchange for 25% of revenue flowing to the U.S. government. The decision reverses nearly a decade of tightening export controls and represents the most significant recalibration of technology export strategy since restrictions began in 2022. Critics warn the move hands China access to hardware "integral to modern military applications," while the administration frames the deal as a trade negotiation win that keeps U.S. chipmakers competitive.
What Happened
President Trump announced on December 8 that the U.S. would allow Nvidia to sell its H200 chips to China, the second most powerful AI accelerator in Nvidia's lineup. The president added: "25% will be paid to the United States of America," implying a quarter of Nvidia's China revenue would flow to federal coffers.
The decision follows a similar 15% arrangement struck earlier in 2025 with Nvidia and AMD. The Commerce Department confirmed it would finalize similar terms for AMD, Intel, and other American chip companies.
The reversal came just months after the Trump administration rescinded the Biden-era AI Diffusion Rule in May 2025. That rule, published January 15, 2025, would have divided the world into three tiers with varying restrictions on advanced chip access. Commerce stated the rule would have "stifled American innovation" and burdened companies with excessive regulatory requirements.
Nvidia's Blackwell chips and next-generation Rubin chips remain excluded from the deal.
Why It Matters
The policy shift fundamentally challenges how export controls work and creates new uncertainty for AI infrastructure planning.
Commercial Stakes: Nvidia lost $2.5 billion in H20 sales during Q1 2025 under previous restrictions, with another $8 billion expected in Q2 losses. China represents roughly 13% of Nvidia's revenue and hosts about half of all global AI developers. Reopening sales delivers a major financial boost to the company.
Trade Negotiation Context: Treasury Secretary Scott Bessent told Bloomberg that Nvidia export controls served as a "negotiating chip" in broader U.S.-China trade talks. Commerce Secretary Howard Lutnick linked the chip sales resumption to trade agreements on rare earths.
National Security Concerns: Former White House NSC official Chris McGuire called the policy "a significant strategic mistake," describing the H200 as "the one thing holding China back in AI." Representative Meeks warned that approving H200 licenses conflicts with Congressional policy restricting exports that make "significant contribution to the military potential" of other countries.
Ally Uncertainty: The policy reversal raises urgent questions for U.S. allies caught between economic dependence on China and defense alignment with an increasingly unpredictable United States.
Technical Details
What the H200 Offers
The H200 represents Nvidia's second-most-powerful AI chip, built on the Hopper architecture with 141GB HBM3e memory and 4.8 TB/s bandwidth. The chip significantly outperforms the H100 on inference workloads and remains critical for training and running large AI models.
Policy Timeline 2025
| Date | Action |
|---|---|
| January 15, 2025 | Biden publishes AI Diffusion Rule (global chip licensing framework) |
| May 13, 2025 | Trump administration rescinds AI Diffusion Rule |
| April 2025 | Trump bans even "compliant" chips, ramps tariffs |
| July 2025 | Administration reverses, approves H20 and AMD MI308 licenses |
| December 8, 2025 | Trump announces H200 sales to China with 25% revenue requirement |
25% Revenue Structure
The administration has not clarified implementation details for the 25% revenue arrangement. The earlier 15% deal provided a precedent, but questions remain about:
- Whether the fee applies to gross revenue or profit
- How the government will verify compliance
- Treatment of chips sold through intermediaries
- Impact on Nvidia's pricing strategy
China's Response
Despite Trump claiming "President Xi responded positively," the Financial Times reported Beijing would limit access to H200 chips despite Trump's export approval. The Chinese government urges companies to use domestically designed and manufactured chips instead.
By August 2025, Nvidia ordered suppliers to halt H20 production after Beijing warned Chinese companies to avoid the chips due to security concerns. The company reportedly began developing a new China-specific chip at roughly half the power of the B300 Blackwell.
What's Next
The Commerce Department launched a review of advanced Nvidia AI chip sales to China on December 19, suggesting the policy remains fluid.
Key uncertainties for 2026: - Whether the 25% revenue structure survives Congressional scrutiny - How China's domestic chip push affects demand for U.S. hardware - Whether allies adopt similar fee-based export models - Impact on Nvidia's competitive position versus Huawei's Ascend accelerators
The ITIF analysis argues the administration correctly identified that sales to China fund U.S. R&D and maintain Chinese AI dependence on American technology, but the 25% fee undermines that goal by reducing U.S. chipmakers' competitiveness.
By repeatedly imposing and relaxing restrictions, the United States has forced China to accelerate domestic chip development, self-reliance strategies, and awareness of U.S. economic vulnerabilities.
Introl Angle
Export control volatility affects GPU procurement timelines and supply chain planning for AI infrastructure deployments. Introl's global presence across 257 locations helps organizations navigate regional availability constraints. Learn more about our coverage area.
Published: December 29, 2025