Nvidia CEO Jensen Huang has expressed optimism about obtaining US export licenses soon to ship its H20 AI chips to China.

Speaking at the International Supply Chain Expo in Beijing on July 16, 2025, Huang said that US officials assured the company of a prompt licensing process.

The H20 chip, designed for AI development, was created to comply with US export restrictions.

However, earlier controls had blocked sales without specific permits.

Nvidia announced earlier this week that US authorities had lifted these restrictions, allowing the company to resume exports of the chip to China.

Huang confirmed that Nvidia has significant orders ready for fulfillment.

It remains uncertain how many licenses will be approved and whether they will apply to new production or existing inventory. Huang noted, “We have to wait until the licenses come through,” reiterating confidence in the process.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ The economic stakes of AI chip access demonstrate why export controls have limited effectiveness

The H20 policy reversal reflects a pattern we’ve seen before: export controls on advanced technology often struggle to achieve their intended effects when economic incentives are overwhelming.

Before the reversal, Nvidia had reported billions in losses from unsold inventory and halted sales to China, while simultaneously seeing its market dominance erode from 95% to 50% according to Jensen Huang’s May statements 1.

China’s data center buildout continues, with Bloomberg reporting 39 planned centers in Xinjiang expected to utilize over 115,000 advanced AI chips 1.

These economic realities create powerful pressure against restrictions. Companies lose revenue while target countries develop alternatives, as evidenced by Huawei’s growing market share during the restriction period.

Export controls face a fundamental dilemma: too permissive and they fail to limit access to sensitive technology, too restrictive and they accelerate domestic development and create economic blowback on domestic industries.

2️⃣ AI chip competition intensifies beyond the geopolitical headlines

While US-China tensions dominate discussions of the AI chip market, the competitive landscape is rapidly evolving with AMD making strategic moves to challenge Nvidia’s position.

AMD’s newly unveiled Instinct 350 Series GPUs and its acquisition of Pensando Systems to develop the Pollara 400 AI NIC demonstrate how competitors are advancing their technical capabilities 2.

The company is pursuing an open ecosystem approach to attract developers and organizations, contrasting with Nvidia’s more proprietary solutions in a bid to differentiate its offerings 2.

This competitive dynamic is occurring against the backdrop of a massive market opportunity, with the total addressable market for AI data center accelerators projected to exceed $500 billion by 2028 2.

Strategic partnerships between AMD and major tech players like Meta and OpenAI further highlight how the competitive landscape extends beyond just hardware to include software ecosystems and strategic alliances 2.

3️⃣ Export policy shifts reflect the challenge of balancing security and innovation

The Nvidia H20 case demonstrates the persistent tension between protecting national security and maintaining technological leadership through global market participation.

Researchers and companies have previously warned that overly strict export controls could hinder innovation and scientific collaboration, potentially slowing progress on addressing global challenges 3.

Critics have argued that broad restrictions covering categories like AI and computer chips may inadvertently strengthen China’s technological capabilities by pushing it to develop domestic alternatives 3.

The back-and-forth on export policies—designing chips to meet restrictions, seeing those designs blocked, then having restrictions eased—creates business uncertainty that affects long-term investment decisions.

This pattern suggests that policymakers continue to struggle with finding the right balance between security concerns and maintaining technological competitiveness in a globally interconnected innovation ecosystem.

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