Nvidia Caught Between US Curbs And Chinese Demand

US-based Nvidia is a world-leading producer of AI semiconductors and the first company to hit $4 trillion in stock market value. However, the AI chip supplier has become entangled in trade tensions between the United States and China.

The AI chip supplier enjoyed a huge market share in China until 2021—about 95%—but it started facing hurdles, and its share fell sharply to 50% by 2025 due to U.S. export controls and restrictions on its advanced AI chips.

During the Biden administration, the U.S. announced export restrictions to prevent China from accessing advanced AI chips and semiconductor manufacturing equipment. The U.S. restricted the export of Nvidia’s A100 and H100 GPUs to China without a license. These exports were restricted due to concerns about their potential use in military applications or other areas.

In response, Nvidia developed the modified versions - A800 and H800 chips - with reduced performance, specifically for Chinese market to comply with the regulations. However, these too were later banned as the Biden administration update the rules.

These chip-related restrictions continued under Donald Trump, who won a second term as US President in 2024.

Before leaving the office, then-President Joe Biden took series of actions, including the “AI Diffusion Rule”, designed tp prevent AI technologies developed in U.S. falling into the hands of adversarial countries. This was not well-received by Nvidia, which called the rule as unprecedented and misguided.

“The Biden Administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided “AI Diffusion” rule, which threatens to derail innovation and economic growth worldwide,” said Nvidia Vice President Ned Finkle.

“In its last days in office, the Biden Administration seeks to undermine America’s leadership with a 200+ page regulatory morass, drafted in secret and without proper legislative review. This sweeping overreach would impose bureaucratic control over how America’s leading semiconductors, computers, systems and even software are designed and marketed globally. And by attempting to rig market outcomes and stifle competition — the lifeblood of innovation — the Biden Administration’s new rule threatens to squander America’s hard-won technological advantage,” he added.

In May, the Trump administration scrapped the “AI Diffusion Rule”, a move welcomed by Nvidia.

Still, Nvidia faced hurdles during the Trump administration. In April, the U.S government told Nvidia that the downsized H20 chip, designed specifically for China, require an export license.

Nvidia CEO Jensen Huang criticised the decision, stating that the U.S. export controls on AI chips to China has failed. "The local companies are very, very talented and very determined, and the export control gave them the spirit, the energy and the government support to accelerate their development," Huang told reporters at tech show, Computex.

Huang made three visits to China in 2025, solidifying Nvidia’s presence in Chinese market.

In July, Huang met President Donald Trump, after Nvidia hit $4 trillion in stock market value. Following the visit, the AI chip supplier announced plans to resume sales of H20 chip to China again.

"The U.S. government has assured Nvidia that licences will be granted, and Nvidia hopes to start deliveries soon," said the company.

Following the announcement, Chinese firms were “scrambling” to buy it, according to a report by Reuters citing two sources. “Central to the process is a ‘whitelist’ put together by Nvidia for Chinese companies to register for potential purchases,” the report said. Nvidia also ordered 3 lakh H20 chips from Taiwan Semiconductor Manufacturing Company (TSMC) due to heavy Chinese demand.

Despite this progress, Nvidia still faces hurdles. US lawmakers have proposed plans requiring Nvidia and AI chip makers to include built-in location tracking. Meanwhile, China has summoned Nvidia over security risks related to H20 chip. The Cyberspace Administration of China asked Nvidia to explain the security risks of vulnerabilities and backdoors in its H20 chips sold to China and submit relevant supporting materials. However, an AFP report revealed that Nvidia confirmed that its chips do not contain "backdoors.”