The landscape for semiconductor giant Nvidia is shifting. Recent policy changes from the Trump administration have opened a conditional path back into the critical Chinese market, even as broader sector concerns and competitive pressures mount.
A Conditional Return to the Chinese Market
In a significant policy shift, the U.S. government, under President Donald Trump, has granted Nvidia authorization to export its H200 AI chips to approved customers in China. This chip, the company’s second-most powerful, delivers performance six times greater than the previous China-specific H20 model.
This access comes with a substantial cost: 25% of all revenue generated from these sales will be directed to the U.S. Treasury, a notable increase from the 15% fee discussed in August. The authorization does not extend to Nvidia’s more advanced Blackwell chips, which remain under a strict export ban. While Chinese technology leaders ByteDance and Alibaba have expressed interest, the reaction from Beijing has been cautious. Chinese regulators are holding emergency meetings to evaluate potential import restrictions, and the government continues to push domestic alternatives, with firms like Huawei and Cambricon expanding their chip manufacturing capabilities.
Broader Sector Sentiment Sours
The entire AI sector faced pressure following disappointing quarterly results from cloud provider Oracle. Its weak revenue forecast raised doubts about whether massive investments in AI infrastructure can be monetized quickly enough. This sentiment dragged down Nvidia’s share price alongside other AI-focused equities. CoreWeave shares fell more than 3% in after-hours trading, while Broadcom, Marvell Technology, and AMD saw declines between 0.5% and 1%.
This contributed to a challenging November for Nvidia, during which its stock lost 12.6% of its value despite the company posting record quarterly results.
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Countering Illicit Trade with Technology
In response to a high-profile smuggling case, Nvidia is developing new anti-smuggling software. The U.S. Department of Justice recently arrested individuals attempting to smuggle Nvidia chips worth approximately $160 million into China, with the products relabeled as “SANDKYAN” to evade export controls.
Nvidia’s solution uses GPU telemetry and network latency measurements to determine a chip’s physical location. The company emphasizes that the software is optional for customers to install, contains no remote-control functions, and will initially be available for Blackwell chips. Nvidia plans to release the code as open source.
Strategic Investment and Growing Competition
Nvidia is deepening its strategic positioning with a $2 billion investment in chip design software leader Synopsys. This partnership aims to accelerate the shift from CPU-based to GPU-based computing power in semiconductor development. Synopsys CEO Sassine Ghazi clarified that the investment creates options for software adaptation but does not obligate the company to purchase Nvidia hardware.
Competitive threats are intensifying. Google trained its latest Gemini-3 model entirely on its own proprietary TPU chips, bypassing Nvidia GPUs altogether and challenging the narrative of Nvidia’s indispensability. Furthermore, SK Hynix, a crucial supplier of high-bandwidth memory chips essential for Nvidia’s AI processors, is considering a U.S. stock market listing.
Nvidia CEO Jensen Huang has previously noted the company’s market share in China plummeted from 95% to virtually zero. The H200 license opens a door, but whether Beijing will walk through it remains an open question.
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