China Rejects Nvidia H200 Chip, Trump Confirms Beijing's Drive for Self-Reliance
US President Donald Trump confirmed on Friday that Beijing refused to approve the purchase of Nvidia’s H200 AI chips, citing China’s desire to develop its own technology. In remarks to reporters aboard Air Force One after a summit with Chinese President Xi Jinping, Trump said: “They (China) have a capability far above the H200. They need it, and yes, that surfaced in talks. They chose not to buy because they want to develop their own technology.” The news sent shockwaves through the market, with Nvidia shares trading down about 4.4% on Friday, erasing a peak reached a day earlier when the US Commerce Department initially signalled approval for the sale.
Earlier in the week there had been some optimism after the Commerce Department authorised roughly ten Chinese technology giants—such as Alibaba, Tencent, ByteDance, and JD.com—to purchase up to 75,000 H200 chips. The deal was forecast to be worth around $15 billion to $20 billion. Nvidia chief executive Jensen Huang even joined the White House delegation to Alaska and Beijing as a last‑ditch effort to secure the agreement. However, by Friday no H200 units had been shipped to buyers in China, and Beijing was reportedly quietly guiding domestic firms to cancel their orders.
Beijing’s stance has been reinforced by rapid progress in local technology. DeepSeek, one of China’s leading AI laboratories, recently launched the V4 model optimised for Huawei’s Ascend chips rather than Nvidia hardware. ByteDance has also been reported to have increased AI capital expenditure for 2026 to about $30 billion, with a large portion earmarked for domestic chip manufacturers.
Another hurdle is the US routing rule, which requires chips to pass through US territory before re-export to China so the Treasury can collect a 25% levy on each sale. Beijing objects to this arrangement on grounds of supply‑chain security and potential hidden vulnerabilities in the hardware.
Huang acknowledged that Nvidia’s share of the official China market is now close to zero, a sharp drop from around 95% prior to export controls. Nvidia’s annual report notes the company is effectively shut out of competition in China’s data‑centre computing market.
Nevertheless, Wall Street remains optimistic about Nvidia’s long‑term prospects. Analysts from Cantor Fitzgerald and Melius Research continue to set high price targets, citing strong demand from cloud service providers (hyperscalers) globally and sovereign AI projects in other countries. Investors now await Nvidia’s first‑quarter results for 2027, due on Wednesday, 20 May. The market focus will be on how management responds to competition from Huawei’s Ascend and whether it revises revenue guidance to reflect zero revenue from the Chinese market.