Nvidia and AMD to resume AI Chip sales to China following trade negotiations

US chipmakers received government assurances on export licenses as part of broader rare earths agreement

Nvidia and AMD are set to resume sales of artificial intelligence (AI) chips to China after months of restrictions, following recent trade negotiations between the US and China that have linked semiconductor exports to rare earth materials access.

The world's most valuable company, Nvidia, announced Monday that it has applied to resume sales of its H20 AI chip to China and received assurances from the US government that licenses will be approved soon. The move comes after Nvidia CEO Jensen Huang met with President Donald Trump at the White House last week.

Part of broader trade deal

Commerce Secretary Howard Lutnick confirmed Tuesday that Nvidia's chip resumption is tied to US negotiations on rare earths materials. "We put that in the trade deal with the magnets," Lutnick told Reuters, referring to an agreement to restart rare earth shipments to US manufacturers.

Treasury Secretary Scott Bessent described the Nvidia export controls as a "negotiating chip" in larger US-China trade talks, according to Bloomberg.

China dominates the rare earths market—a group of 17 metals critical for cellphones, weapons, and electric vehicles—and had halted exports in March following trade disputes with the Trump administration.

Significant revenue impact

The restrictions have cost Nvidia substantially. The company estimated missing US$2.5 billion in H20 sales during the first quarter of 2025, with an expected $8 billion revenue loss in the second quarter. Overall, Nvidia projected the curbs would reduce revenue by US$15 billion.

China represented 13% of Nvidia's total sales in 2024, generating US$17 billion in revenue for the chipmaker.

AMD follows suit

AMD announced Tuesday it would also resume AI chip sales to China. "We were recently informed by the Department of Commerce that license applications to export MI308 products to China will be moving forward for review," the company stated. "We plan to resume shipments as licenses are approved."

Both companies' shares surged on the news, with Nvidia closing up 4% and AMD gaining 7%.

Congressional concerns

The decision has drawn criticism from US legislators across party lines. Democratic Representative Raja Krishnamoorthi called the move "dangerously inconsistent" with the administration's previous position on export controls.

Republican John Moolenaar, chair of the House Select Committee on China, expressed concern about the H20 chip's role in Chinese AI development. "The H20 is a powerful chip that, according to our bipartisan investigation, played a significant role in the rise of PRC AI companies like DeepSeek," he said.

The announcement has also triggered a scramble among Chinese companies to secure H20 chips, according to Reuters sources. Internet giants ByteDance and Tencent are reportedly submitting applications for the chips through an approved list system managed by Nvidia.

Strategic implications

The H20 chips, while less powerful than Nvidia's unrestricted versions, remain compatible with Nvidia's software tools—considered the de facto standard in the global AI industry. This compatibility gives them significant strategic value for Chinese developers.

Huang, currently visiting Beijing, has argued that restricting American technology sales to China could ultimately undermine US leadership as Chinese companies develop domestic alternatives. "In order for America to be the world leader... we want the American tech stack to be the global standard," he told CNN.

AI expert Divyansh Kaushik from Beacon Global Strategies noted the significance depends on volume: "If China is able to get a million H20 chips, it could significantly narrow, if not overtake, the US lead in AI."

The resumption marks a significant reversal of export restrictions implemented just months ago over national security concerns, highlighting how quickly geopolitical and economic pressures can reshape technology trade policy in the rapidly evolving AI landscape.