Nvidia’s H200 China Approval Looks Like a Win. Beijing’s H20 Rejection Proves It’s Not.

Nvidia (NVDA) just won something it’s been chasing for months: permission from President Donald Trump to sell H200 chips into China. CEO Jensen Huang got what he lobbied for, Wall Street sees the headline “China approval,” and traders are bidding the stock higher expecting a $50 billion market opportunity to open up.

There’s just one problem. Huang himself doesn’t believe it will happen.

Three days before the approval announcement, the CEO of the world’s most valuable chipmaker told reporters he had “no clue” whether China would actually accept the H200. That casual admission matters more than the approval itself. Getting permission in Washington is only half the equation. Getting actual demand in Beijing is something else. And Beijing has already shown what it thinks of American chip approvals.

The proof is sitting five months in the rearview mirror, and it cost Nvidia $5.5 billion.

Five Months Ago: The H20 Lesson Investors Forgot

Summer 2025 feels like a long time in stock trading, but the H20 episode is the best predictor of what comes next with the H200.

In July, the Trump administration approved H20 exports after Huang spent months lobbying. Nvidia called it a breakthrough. Finally they had access back to China’s $50 billion AI chip market. And Wall Street bought the pitch. The stock rallied on the headline.

Then Beijing quietly acted. Not with an official ban or public statement. Instead, with clear government guidance to major cloud providers and AI companies: You need to use domestic chips. No formal restrictions. No fanfare. Just a policy signal so clear that Alibaba (BABA), Tencent (TCEHY), and ByteDance all reportedly backed away from American processors overnight.

The H20 went from breakthrough to backlog in weeks. By August, Nvidia halted production entirely. In September, it took a $5.5 billion quarterly charge tied to the China export failure. A regulatory win became a $5.5 billion loss in under 90 days.

That timeline is important because it reveals Beijing’s true playbook. They don’t need to ban American chips. They don’t need to fight in court. They only have to tell their own companies not to buy them. The politics override the product every time.

China’s Real Strategy: Independence, Not Imports

Beijing didn’t crush H20 demand for technical reasons. The chip worked well for the AI workloads Chinese companies needed. The reason in this case was strategic: Building domestic chip independence is a national security goal, and every dollar Alibaba spends on Nvidia is a dollar not spent building alternatives like Huawei’s in-house processors or SMIC’s foundry business.

China’s government has committed over $140 billion to semiconductor development since 2014. That commitment doesn’t reverse because Trump signed off on an export license. If anything, that approval reinforces Beijing’s plans. Chinese officials can point to it and say: This is exactly why we can’t depend on American chips. We need our own.

The H200 being twice as powerful as the H20 won’t solve this problem. It will make it worse, in reality. A stronger American chip threatening Chinese independence only hardens Beijing’s resolve to build alternatives.

Huang’s “we have no clue” admission suggests he do understand this dynamic. He’s hoping for demand that China’s government has every incentive to suppress. And thus, that’s not a market opportunity, it’s hope sold as a trade.

The Headline Versus the Handoff

Most investors understand this distinction: there’s a massive gap between regulatory approval and actual revenue.

Trump’s approval means Nvidia can legally ship H200 chips to China. It does not mean Chinese companies will order them. It does not mean Beijing will let those orders go through. And it does not mean this generates the $50 billion in revenue Huang keeps citing.

The difference between regulatory news and market news is often misunderstood: One is about what governments allow, the other is about what customers actually buy.

Consider what has to happen for this to work. Nvidia needs purchase orders from Alibaba, Tencent, ByteDance, and Baidu (BIDU). Those companies need tacit approval from Beijing to spend billions on American processors. Beijing has spent the past year signaling the opposite: build domestic. Nothing about the H200 approval changes Beijing’s incentives.

If you’re long Nvidia based on China revenue expectations, you’re betting that Chinese President Xi Jinping reverses a multi-year strategic priority because Trump granted an export license. 

How This Pattern Will Unfold

Based on the H20 playbook, expect this sequence:

The H200 approval generates a short-term rally. Headline traders buy on the news. That usually lasts a few days to a couple of weeks. Then the market shifts to waiting for actual evidence: order announcements from major Chinese cloud providers.

Weeks pass with silence. No Alibaba announcement. No Tencent procurement news. No reports of Chinese companies placing H200 orders. Meanwhile, Beijing’s state media and industry officials quietly double down on the messaging: buy domestic, not American.

Eventually, Nvidia updates guidance and removes its China revenue assumptions (just as it did after the H20 failed). The stock gives back gains as investors realize regulatory approval is not the same as commercial success.

We watched this exact script play out five months ago. Investors who sold the H20 approval rally made money. Investors who held expecting that approval to translate into revenue lost money.

The forces behind this reality haven’t changed. China wants chip independence. The H200 is a better product than the H20. But a better product doesn’t overcome a government that has decided not to buy it.

The Signals to Watch

If you want to trade Nvidia around this approval, track these specific indicators:

• Chinese company order announcements. If Alibaba, Tencent, ByteDance, or Baidu announce H200 purchases, the thesis shifts. If silence persists for more than a month, the H20 pattern is repeating.
• Guidance updates from Nvidia. The company has explicitly excluded China data center revenue from financial forecasts. If management adds it back, that signals genuine confidence that demand is real. If they keep it out, they know what H20 taught them.
• Beijing signals in Chinese media. Government pressure on domestic tech firms typically surfaces in Chinese business publications first, often as unnamed source stories. Monitor reports of guidance against American chip purchases.
• The dormant 25% revenue share. Trump’s deal includes a 25% cut of China sales revenue for the government. That structure hasn’t generated any payments because there are no sales. If it remains inactive, the approval is symbolic only.

So, Why Huang Pushed for a Deal That Might Fail?

You might wonder why Nvidia’s CEO, Jensen Huang, fought so hard for this approval. If China blocked the last chip, why try again? It seems like a waste of time. But Huang is playing a smarter game. He likely knew the chips might not sell, but he needed a different kind of win.

First, he needed a victory in Washington. By making a deal with President Trump, Huang looks like a partner, not just a businessman. He offered the government a 25% cut of the sales. This makes him look patriotic and keeps powerful politicians on his side. It shields Nvidia from being attacked as "greedy" by national security hawks.

Second, he had to protect the stock price. If Huang admitted that the China market was lost forever, Nvidia’s stock might crash. Investors hate losing a huge opportunity. By getting this approval, he keeps the story alive. He can tell Wall Street, "We are doing everything we can." This keeps the stock price high today, even if no chips are sold tomorrow.

Third, he is buying a lottery ticket. There is a tiny chance China changes its mind. If they do, Nvidia is ready to ship immediately. If they don’t, Huang hasn't lost much. He still looks like a winner to the President and to his investors. He isn't just selling chips; he is buying time and influence.

The Practical Takeaway

Huang won Trump’s approval, but he didn’t win Beijing's demand. Until actual orders flow from Chinese companies, the H200 “victory” is a regulatory signal with no commercial value.

The H20 episode proved this five months ago. Approval came. Demand never materialized. The stock rallied on headlines, then faded as investors realized regulatory permission isn’t the same as market reality.

For now, the trade is simple: Any rally on this H200 news is an opportunity to reduce exposure, not add to it. The headline looks good. The actual mechanics beneath it look like the same game that cost Nvidia $5.5 billion last time.

Beijing played this hand five months ago. The cards look the same this time.