Jensen Huang just pulled off what looks like a major win: convincing Trump to let Nvidia (NVDA) sell its H200 chips to China. But here's the thing nobody seems to remember—Huang himself told reporters five days earlier that he has absolutely no idea if China will actually buy these chips.
"We don't know. We have no clue," he said to Senate Banking Committee reporters on December 3. That's not exactly the confidence you'd expect from someone whose regulatory victory supposedly unlocked a massive market opportunity.
The CEO of the world's most valuable chipmaker is essentially telling us that Washington's green light is only half the equation. The other half—whether Beijing will allow Chinese companies to actually purchase these chips—remains a complete unknown. And there's a very good reason for Huang's uncertainty: Nvidia lived through this exact scenario just five months ago with the H20 chip, and it ended with a $5.5 billion write-off.
History is about to repeat itself, and traders betting on China revenue are walking straight into the same trap. Markets are celebrating a regulatory victory when they should be bracing for demand reality.
The H20 Disaster That Everyone Seems to Have Forgotten
The H20 timeline is recent enough that it should still be fresh in investors' minds. Apparently it's not.
Back in July, the Trump administration approved H20 exports after months of lobbying from Huang. Nvidia framed it as a breakthrough moment—access to China's artificial intelligence market, a potential $50 billion revenue opportunity. Wall Street bought the narrative, and the stock rallied.
Then it all fell apart within weeks.
Beijing quietly issued guidance to major Chinese tech companies: don't buy American chips. Use domestic alternatives instead. There was no formal ban, no public announcement. Just quiet pressure that killed demand overnight. Nvidia's H20 became radioactive—not because it lacked capability, but because politics trumped performance. The chip was actually well-suited for inference workloads that Chinese AI companies needed, but capability didn't matter when the government decided otherwise.
By August, Nvidia halted H20 production entirely and took a $5.5 billion quarterly charge tied to China export losses. The "breakthrough" turned into a write-off faster than most people could process what had happened.
Now here we are in December. Same CEO, same lobbying playbook, same country, different chip model. The H200 is roughly twice as powerful as the H20, but that increased power isn't solving the fundamental problem—it's making it worse. China's strategic goal hasn't changed: reduce dependence on American semiconductors. A more powerful American chip doesn't help achieve that goal. It makes the rejection more politically necessary.
When the CEO Says He Has No Clue, Maybe Listen
Let's focus on what Huang actually said, because it matters more than the approval headlines.
When reporters asked him whether China would accept the H200 if export restrictions eased, his answer was blunt: "We don't know. We have no clue."
That's not false modesty or careful corporate speak. That's the leader of the world's most valuable chipmaker admitting he cannot predict whether his largest potential market will actually buy his product. Think about how remarkable that admission is.
He added another revealing line: "We can't degrade chips that we sell to China. They won't accept that."
This is where the logic gets circular and frustrating. China won't accept degraded chips designed to comply with export controls. But China also blocked the H20, which was specifically designed to fall just below existing export limits. So what exactly will China accept? Based on Beijing's actions over the past year, the answer appears to be: nothing American.
The $50 Billion Opportunity That Doesn't Actually Exist
Huang keeps citing a $50 billion China opportunity. He mentioned it again last month in a Bloomberg interview, saying "We would love the opportunity to be able to reengage the Chinese market."
But that number is meaningless if the demand doesn't exist. It's like calculating potential restaurant revenue in a city where nobody eats out. The market size looks impressive on paper until you realize the customers have been told not to show up.
China's semiconductor strategy is not a secret. The government has invested over $140 billion into domestic chip development since 2014. Huawei, SMIC, and other domestic players have become national priorities. Every dollar a Chinese company spends buying Nvidia chips is a dollar not spent building China's chip independence. Beijing views semiconductor self-sufficiency as a national security imperative, not a nice-to-have goal.
The H200 approval doesn't change that calculation—if anything, it reinforces it. Chinese officials can point to this approval and tell domestic companies: this is exactly why we need our own alternatives. America controls this supply chain and can turn it on and off whenever Washington feels like it. We cannot afford to depend on this.
Permission Is Not the Same as Payment
There's a critical gap between regulatory permission and actual revenue that traders seem to be ignoring.
Trump's approval means Nvidia can legally export H200 chips to China. It does not mean Chinese companies will order them. It does not mean Beijing will allow those orders to proceed. It certainly doesn't guarantee the chips will generate revenue that shows up in quarterly earnings.
The H20 proved this exact sequence: approved in July, demand killed by August, write-down announced in September. The regulatory victory was real, but it was also commercially worthless.
Investors treating the H200 approval as a bullish catalyst are making a fundamental category error. They're trading regulatory news as if it were commercial news. These are very different things.
Consider how this actually has to work. Nvidia needs Chinese cloud providers and AI companies to place orders. Those companies need Beijing's tacit approval to purchase American chips without facing government backlash. Beijing has spent the past year sending the opposite signal: buy domestic. Nothing about the H200 approval changes Beijing's strategic incentives or political calculations.
If you're long NVDA based on China revenue assumptions, you're essentially betting that Xi Jinping will reverse a multi-year strategic priority because Trump signed off on a chip export. That's not a trade based on analysis—that's hope dressed up as investing.
The Short-Term Rally That Will Probably Fade
NVDA will likely pop on this news. It usually does when headlines contain both "approval" and "China" in the same sentence. Algorithmic traders and momentum players react to keywords. That's normal market behavior.
The question is whether that rally has any staying power. Based on the H20 precedent, the answer is probably no. Here's the pattern we should expect:
- Approval announcement drives initial buying pressure
- Market waits for actual order flow from Chinese customers
- No meaningful orders materialize over the following weeks
- Stock gives back gains as revenue expectations reset to reality
We watched this exact sequence play out five months ago. Investors who bought the H20 approval rally and held through Beijing's rejection lost money. Investors who sold into the initial enthusiasm made money. The structural dynamics haven't changed since then.
China wants chip independence, not chip imports. The H200 is objectively a better product than the H20 from a technical standpoint. But technical superiority doesn't overcome a government that has decided not to buy your product for political reasons.
Why Huang Fought for a Deal He Probably Knew Would Fail
You might be wondering why Huang pushed so hard for this approval if China blocked the last chip. Why waste the effort? But Huang is playing a more sophisticated game than just trying to make immediate sales.
First, he needed a political win in Washington. By cutting a deal with Trump that includes giving the U.S. government a 25% revenue share, Huang positions Nvidia as a patriotic partner rather than just a profit-seeking corporation. This shields the company from attacks by national security hawks who might otherwise push for even stricter export controls.
Second, he had to manage the stock narrative. If Huang publicly admitted the China market was permanently lost, NVDA would likely take a significant hit. Investors hate losing access to massive potential markets. By securing this approval, he keeps the China opportunity story alive. He can tell Wall Street "we're doing everything possible"—which keeps the stock elevated today even if no actual chips get sold tomorrow.
Third, he's essentially buying a lottery ticket with favorable odds. There's a small chance China's position shifts, and if it does, Nvidia will be ready to ship immediately. If China doesn't budge, Huang hasn't lost much except some lobbying time, and he still looks like a winner to both the President and his shareholders. He's not just selling semiconductors—he's buying time, political capital, and strategic optionality.
What Actually Matters If You're Trading This
If you want to trade NVDA around this approval news, here are the signals that actually matter:
Order announcements from major Chinese cloud providers. Watch Alibaba, Tencent, ByteDance, and Baidu. If they announce H200 purchase orders, the thesis changes completely. If weeks pass in silence, the H20 pattern is repeating itself.
Beijing guidance signals. Pay attention to reports of government pressure on Chinese tech firms regarding American chip purchases. These typically emerge through Chinese business media first, often citing unnamed sources.
Nvidia's revenue guidance revisions. The company has been excluding China data center revenue from its forecasts. If management adds it back into guidance, that signals genuine confidence that sales will materialize. If they keep excluding it, leadership knows what the H20 experience taught them.
The 25% revenue share mechanism. This unprecedented arrangement Trump negotiated hasn't generated any payments because there have been zero sales. If this mechanism remains inactive over the coming months, the approval is purely symbolic.
The Bottom Line
Huang won Trump's approval to sell chips to China. He did not win Beijing's permission for Chinese companies to actually buy those chips. Until actual purchase orders flow from Chinese customers, the H200 "victory" is just a permission slip with no commercial value.
The H20 showed us exactly how this story ends. Approval arrives, headlines celebrate, the stock rallies briefly, but demand never materializes. Commercial reality eventually reasserts itself, and the gains evaporate.
Traders betting on China revenue should wait for concrete evidence that revenue will actually materialize—actual orders, actual shipments, actual payments. So far, Beijing's most recent signal was blocking the H20 just three months ago. Nothing fundamental has changed since then about China's semiconductor strategy or political priorities.
Regulatory approval and revenue generation are not the same thing. The market is pricing in the first while ignoring the likely absence of the second. That gap is where this trade will probably break down.