Nvidia’s H200 AI chip remains caught in a familiar but increasingly consequential bind: approved in principle, constrained in practice, and emblematic of how U.S.-China technology relations now operate in slow motion rather than absolutes.
Nearly two months after U.S. President Donald Trump gave the green light for exports, sales of the H200 to China have yet to resume in any meaningful way. The delay, as reported by the Financial Times, is not a technical issue nor a question of demand. It is the product of a layered national security review that has exposed fault lines within the U.S. government itself and reinforced uncertainty for Chinese buyers already wary of sudden policy reversals.
At the center of the impasse is the licensing process imposed in January, when the Commerce Department eased export curbs on the H200 but required applications to be reviewed not just internally, but also by the departments of State, Defense, and Energy. That structure reflects how AI chips are no longer treated as ordinary commercial goods, but as strategic assets with implications for military capability, intelligence gathering, and long-term economic power.
According to people familiar with the discussions, Commerce has completed its assessment, suggesting that from a technical export-control standpoint, the H200 can be sold under defined conditions. The sticking point appears to be the State Department, which has argued for tighter restrictions to prevent China from deploying the chips in ways that could undermine U.S. national security. That includes concerns around large-scale AI model training, dual-use applications, and the potential for civilian infrastructure to be repurposed for state or military ends.
This internal pushback matters because it signals that even when export rules are formally relaxed, enforcement and interpretation can remain fluid. For Nvidia, that creates a grey zone where executive assurances do not immediately translate into purchase orders.
Chinese customers, according to the FT, are holding off on placing H200 orders until it becomes clear not only whether licenses will be granted, but also what strings may be attached. Those conditions could include limits on volumes, end uses, data center configurations, or post-sale compliance obligations.
Nvidia CEO Jensen Huang has publicly expressed hope that sales will proceed, saying last week that the license is being finalized. His comments point to confidence that a pathway exists, but they also underscore how dependent the company has become on regulatory discretion rather than straightforward market access.
Over the past two years, Nvidia has repeatedly redesigned and repositioned chips to fit within U.S. rules, turning export compliance into a core part of product strategy.
Reuters reported last month that China approved its first batch of H200 chips for import, a move seen as a pragmatic shift by Beijing. China’s leadership faces its own balancing act: sustaining rapid AI development in the near term while accelerating domestic chip capabilities to reduce reliance on U.S. suppliers. Allowing limited imports of the H200 fits that approach, buying time for local players even as Washington seeks to cap how much advanced capacity China can access.
The uncertainty reinforces a trend already underway for Chinese firms. Cloud providers, AI startups, and research institutions are diversifying supply chains, testing domestic alternatives, and adapting software stacks to work across multiple hardware platforms. Even if Nvidia ultimately secures licenses, the stop-start nature of access weakens its long-term position by encouraging customers to plan for a future where U.S. chips cannot be assumed to be available.
From Washington’s perspective, the drawn-out review reflects a deeper debate about the effectiveness of export controls. Tight restrictions risk pushing China to innovate faster at home, potentially eroding U.S. leverage over time. Looser controls, meanwhile, raise fears of enabling technological advances that could narrow the strategic gap in areas Washington considers sensitive.
The H200 sits squarely in that tension: powerful enough to matter, but already a step behind Nvidia’s most advanced offerings reserved for unrestricted markets.
The episode also illustrates how inter-agency dynamics now shape global tech markets. Decisions are no longer binary approvals or bans, but negotiated outcomes influenced by competing priorities across departments. That means longer timelines, higher compliance costs, and greater revenue volatility for companies like Nvidia.
Until the national security review concludes and license conditions are spelled out, Nvidia’s H200 is expected to remain in a holding pattern. The delay may eventually be resolved, but the broader message, which is: access to advanced AI hardware is now a matter of statecraft as much as commerce, has already been sent.
