China appears to be turning away from Nvidia’s H200 AI chip despite recent US efforts to ease its path into the Chinese market, raising fresh doubts about whether American semiconductor firms can still compete.
White House AI Czar David Sacks said China has effectively “decoded” Washington’s strategy that allowed the sale of Nvidia’s H200 and is instead choosing to prioritise domestically developed chips. His remarks, citing recent news reports, suggest Beijing is doubling down on semiconductor self-reliance rather than reopening its market to US technology. US President Donald Trump recently said his administration would permit Nvidia to sell the H200 to China, a move aligned with Sacks’ broader strategy of countering Chinese tech champions such as Huawei by introducing American competition within their home market. However, Sacks himself acknowledged uncertainty over whether that approach would succeed.
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“They’re rejecting our chips,” Sacks said, adding that China’s push for semiconductor independence appears to be the driving factor. He also claimed Chinese authorities may soon introduce a local approval process requiring buyers to justify purchases of foreign chips, potentially creating another barrier for US suppliers. The comments have renewed concerns over Nvidia’s ability to recover revenue from China, once one of its most important data centre markets. The company has excluded China entirely from its forward-looking projections, even as CEO Jensen Huang has estimated the market could be worth as much as $50 billion this year.
Bloomberg Intelligence analysts estimate that China could generate up to $10 billion in annual revenue for Nvidia’s H200, but only if the chip gains meaningful acceptance in the country — a scenario that now looks increasingly uncertain. Nvidia, meanwhile, said it continues to work with the US government on licensing approvals for H200 shipments to authorised customers. In a statement, the company argued that prolonged and broad export restrictions have had unintended consequences. “While we do not yet have results to report, it’s clear that three years of overbroad export controls fueled America’s foreign competitors and cost US taxpayers billions of dollars,” Nvidia said.
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China’s stance is reinforced by its broader industrial policy. According to Bloomberg, Beijing is considering incentives worth up to $70 billion to bolster its domestic chip industry, highlighting its determination to reduce dependence on foreign suppliers. The proposed package signals continued state backing for local players such as Huawei and Cambricon Technologies, even with the H200 cleared for export under US rules. Together, these developments underline a growing reality for US chipmakers: regulatory access alone may no longer be enough to reclaim China as a viable market, as Beijing accelerates its push for technological self-sufficiency.
