President Donald Trump decided to let Nvidia sell its H200 chips to China after weeks of deliberations with advisers. Bloomberg's Annabelle Droulers breaks down the key factors that drove the decision.

Washington

President Trump has authorized the sale of Nvidia's H200 AI chip to China, a move influenced by the rapid technological progress of China's semiconductor sector, particularly Huawei's advancements. Benchmarking showed Huawei's AI systems are approaching the performance of Nvidia's latest chips, prompting the U.S. administration to reconsider its export policy to maintain a technological edge and encourage Chinese reliance on U.S. infrastructure.

China is responding by promoting domestic AI chip development and placing local suppliers on official procurement lists. However, major Chinese technology firms are already favoring local chip makers due to previous U.S. policy shifts, raising questions about the long-term impact of the latest decision.

Trump's Nvidia reprieve spurred by Huawei's AI gains

Right, let's take a look at this NVIDIA story and this ongoing feature of course when it comes to geopolitics and this trade, let's call it trade in terms of the concepts between the two sides. We're learning more about why President Trump has green-lit sales of the H200 chip specifically to China. Sources say it comes down to the strength of the mainland's semi-ecosystem. Annabelle is here with us to help us unpack that for us and what else are we hearing and just what's forced, is forcing an accurate word, incentivize the White House to allow this to happen? No, I mean it forces a rethink at least of your policies and it comes down to how you benchmark NVIDIA's progress versus what you're seeing in mainland China and the whole push from the U.S. like what you see in China but both want to retain their lead or China wants to catch up but the U.S. wants to retain its lead and when it was making these decisions what we're understanding from sources is that it was looking at how's NVIDIA going versus what we're seeing from the best in China and that's Huawei. What they did was look at one of the Huawei systems that's essentially a platform known as Cloud Matrix 384 or 384. It's built using the Ascend chip series which is Huawei's AI chips and they found that actually when you benchmark the progress or the performance of that system versus what you see from NVIDIA's NVL72 which is built using Blackwell chip architecture, actually the performance was looking pretty similar and so that made them think okay, actually Huawei's really catching up here. If we want to try and retain that lead and we need to then give them more advanced products because the whole idea is that the Trump administration wants Chinese companies to build using U.S. architecture and infrastructure to try and then also reduce that push to build out that self-reliance at least domestically because still NVIDIA's more advanced at least by an 18-month window. The other factor they were looking at for this decision-making was also the production capabilities because SMIC and Huahua are the two main foundries. SMIC really is the one that can do more advanced nodes than what you can get from Huahua but actually we're hearing as well and the White House is estimating that they're going to be able to build millions of these AI processes next year possibly so that also creates that urgency to act and to shift on the H200 policy. The FT has some good reporting on just how China is responding of course to this news of maybe possibly limiting the amount of H200 chips that do come into China and other ways to really preserve its domestic chip sector. Yeah, exactly. There's been two different stories from the FT this morning and they sort of work together quite nicely but to go to that first one, yeah, they're looking at limiting access to H200. One of the other ways they're doing that is looking at maybe restricting buyers or purchases of the H200 chips also maybe saying to companies you need to justify why you want this H200 versus what you can get domestically so that's one policy is to essentially limit companies directly. The other is to continue to build up and to focus on domestic players and one way they can do that as well and the FT is saying is that actually the domestic AI chips have been put on an official procurement list for the first time ever so now a government approved essentially list of supplies for the likes of Huawei, also Cambricom, but it's another way to push I guess and promote that local chip design or chip ecosystem. So they're two different stories but I think it also tracks very nicely with what we've had from our Bloomberg intelligence team and they're sort of saying the same thing here that this Nvidia U-turn is coming too late. We've already got names like Baidu, Alibaba, Tencent that are preferencing local chip makers just because the US administration has been flip-flopping too much on its policy.

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Trump gives Nvidia green light to sell H200 chips to China

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