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- China has refused to buy any H200 AI chips from Nvidia
- The move might be due to costs or security concerns
- It comes after a personal intervention from Donald Trump failed to work
Right now, there are two main players in the world of artificial intelligence (AI) hardware: Nvidia, which makes some of the best-performing AI chips, and China, which has a surging domestic industry that isn’t as reliant on Nvidia. US President Donald Trump has been trying to change that situation and help Nvidia penetrate the Chinese market, but it looks like his latest efforts have backfired spectacularly — potentially ensuring Nvidia misses out on $30 billion worth of sales.
Last week, the US Commerce Department approved sales of Nvidia’s H200 AI chip to ten Chinese firms, including names like Alibaba and Tencent. That could have brought in $15-$20 billion for Nvidia at current prices, with financial analyst John Vinh saying Chinese demand sits at up to $30 billion, according to Moneywise.
Yet in a major blow to Trump and Nvidia CEO Jensen Huang, the Chinese government has declined to approve purchases of the chips by its domestic industry. Trump and Huang had traveled for a meeting with Chinese President Xi Jinping in an attempt to persuade him to allow the H200 sales to proceed. Instead, they came away empty-handed, with Nvidia telling investors its official market share in China is now effectively non-existent.
Speaking to reporters aboard Air Force One, Trump said of China: “They have a much higher level than H200. China needs it and yeah, it came up. They choose not to buy because they want to develop their own. I think something could happen on that.”
In other words, China prefers to orient its AI industry around its own domestically made chips rather than paying to use American imports. And it looks like there are several reasons for that.
Ongoing computing chaos
One reason Chinese firms might not want to use American AI chips, like those manufactured by Nvidia, is that they have to pay a sizeable fee for the privilege. Trump has managed to create an arrangement whereby the US government will levy a 25% tariff on every chip Nvidia sells to China, pushing the price up for these overseas buyers.
But Beijing could be worried about something else. Since US law prohibits direct export fees, the chips must be routed through US territory before heading to China. And that has stoked fears in China that the chips could be tampered with — perhaps to install spyware, for example — before being sent abroad. That has led the Chinese government to turn inwards and provide more support to its own domestic industry rather than foreign firms like Nvidia.
What does this mean for you? Well, we might see Chinese AI models like DeepSeek becoming increasingly optimized for Chinese hardware. That was already happening before the latest move — DeepSeek’s V4 update was optimized for Huawei’s Ascend chips rather than Nvidia's, for instance — but we could see more of this going forward. If you want to use those AI models, you might find yourself disadvantaged when using a device outfitted with a chip from Nvidia, AMD, or Intel.
Beyond that, it demonstrates that the ongoing computing chaos caused by the AI boom is still in full swing. With component prices through the roof and uncertainty over future sales for Nvidia — currently one of the world’s biggest tech firms — it’s anyone’s guess what will happen next.
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