US policy reversal allows Nvidia and AMD to resume sales of advanced AI chips to China after prior export restrictions.

Shares of Nvidia Corp. and Advanced Micro Devices Inc. jumped on news that they will resume the sale of artificial intelligence chips to China, with Nvidia gaining more than 3.9% in trading while AMD rose 5.6%. The development comes three months after the U.S. Commerce Department effectively banned such exports in April, when the agency informed both companies that they would require a license to sell their scaled-down AI chips to China.

The export restrictions have a longer history, beginning in 2022 when the U.S. rolled out a set of export controls that limited the sale of advanced AI chips to China, applying restrictions to graphics processing units that exceeded certain performance thresholds. In response, Nvidia and AMD developed scaled-down versions of their GPUs for the Chinese market: Nvidia's H20, introduced in 2023 as a slower version of the company's H100 chip, and AMD's MI308.

The financial toll of the restrictions has been substantial. Earlier this year, Nvidia Chief Executive Officer Jensen Huang revealed that the export controls had halved the company's revenue in China, though the company still generated sales of $17 billion in the country during its fiscal year ended January 26. When the April ban was imposed, Nvidia projected that the development would cost it $5.5 billion in the fiscal fourth quarter, while AMD warned shareholders of an $800 million charge.

The path forward now appears to offer significant revenue restoration. "Nvidia is filing applications to sell the Nvidia H20 GPU again," the company said in a late Monday statement. "The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon." Nvidia also previewed a new chip dubbed the RTX PRO that it describes as "fully compliant," though it did not share the processor's specifications, only noting that it's "ideal for digital twin AI for smart factories and logistics."

According to Reuters, investment firm Hargreaves Lansdown expects the development to boost Nvidia's revenue by $15 billion to $20 billion this year, depending on the speed of license approvals and the pace of chip production. Reuters also cited sources indicating that customers in China are "scrambling to buy" the H20, with TikTok parent ByteDance Ltd. and Tencent Holdings Ltd. reportedly among the companies planning to place orders.