Nvidia (NVDA) Stock: $30 Billion China Deal Blocked by Beijing Restrictions

TLDR

• China instructed customs agents to block Nvidia H200 AI chips from entering the country and told domestic tech firms not to buy them unless absolutely necessary
• The U.S. approved limited H200 exports to China with a cap ensuring Chinese buyers couldn’t exceed half of Nvidia’s global shipments
• Chinese companies including Alibaba, Tencent, and ByteDance had placed orders for over 2 million H200 chips at $27,000 each, but Nvidia only has 700,000 units in stock
• KeyBanc analyst estimates Chinese demand could represent $30 billion in revenue, with Nvidia agreeing to give the U.S. government a 25% cut
• The H200 delivers six times more performance than the H20 chip, which already faced restrictions in China last year

Nvidia received approval from U.S. authorities to ship its H200 AI chips to China. But Chinese customs agents have been ordered not to allow the processors into the country.

NVIDIA Corporation, NVDA

The conflicting moves from Washington and Beijing create fresh uncertainty for Nvidia’s China business. The company’s stock closed up 0.47% at $185.81 on Tuesday despite the news.

Chinese customs authorities told their agents that H200 chips cannot enter the country, according to Reuters. Government officials also instructed domestic tech companies not to purchase the hardware unless absolutely necessary. No formal reasons were provided, but the language suggests a temporary ban is in place.

The U.S. Commerce Department’s Bureau of Industry and Security published new rules Tuesday allowing H200 exports under strict conditions. Nvidia must ensure sufficient chip supply remains in the U.S. Customers also need to demonstrate adequate security procedures before shipments can proceed.

The U.S. placed a cap on sales so Chinese buyers couldn’t account for more than half of Nvidia’s global H200 shipments. Nvidia agreed to give the U.S. government a 25% cut of China sales.

Massive Demand Meets Supply Constraints

Major Chinese tech companies had already placed large orders for the H200. Alibaba, Tencent, and ByteDance are among the firms that want the chips. Each processor costs about $27,000.

Total demand from China was estimated at more than 2 million units. KeyBanc analyst John Vinh calculated this represents roughly $30 billion in potential revenue.

But Nvidia only has about 700,000 H200 chips in stock. Supply would have been tight even without the new restrictions.

The H200 is Nvidia’s second most powerful AI chip. It delivers roughly six times more performance than the H20 model.

History Repeating

The H20 chip faced restrictions in China last year. After those limits took effect, Nvidia CEO Jensen Huang said the company’s market share in China had fallen to zero.

The H200 was viewed as a potential way back into the Chinese market. That path now looks blocked.

Beijing may be using this pause to push domestic chipmakers forward. Companies like Huawei are expanding their AI chip operations with products like the Ascend 910C processor.

The H200 is still considered more efficient for training large-scale AI models. But Chinese companies may have to look elsewhere if the restrictions hold.

President Donald Trump previously said the government would allow Advanced Micro Devices and Intel to pursue similar chip sales deals with China.

On Wall Street, Nvidia holds a Strong Buy consensus rating. The average price target sits at $264.97, implying 42.60% upside from current levels.

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