Nvidia shares experienced a rise of 1.7 percent during US premarket trading after President Donald Trump announced that the sale of its H200 chips to approved Chinese customers will be permitted. This decision alleviates concerns regarding access to one of Nvidia’s most significant markets.

The announcement seems to resolve an ongoing debate about whether Nvidia and its competitors should maintain their global lead by selling their AI chips to China or restrict shipments altogether.

Market Reactions and Future Implications

While the impact of this decision on new sales remains uncertain, especially after Beijing advised companies against using US technology, the move is seen as a potential opportunity for future revenue.

Despite the existing restrictions that hindered the sale of advanced AI processors to China, which has affected Nvidia’s growth in the market, analysts from Morningstar expressed optimism. They noted, “The US has gone back and forth on restrictions, and may do so again in the future, but now we foresee at least a path to meaningful future AI revenue from China.”

Details of the Export Approval

According to Trump, the export of the H200 chips, categorized as Nvidia’s second-tier AI chips, will incur a 25 percent fee on such sales. This information was shared in a post on Truth Social.

However, Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, cautioned that the approval might have a limited effect on Nvidia’s operations in China unless they can also export other chip lines like Blackwell or Rubin.

Furthermore, the US Commerce Department is in the process of finalizing the details, and this policy will similarly apply to other AI chip manufacturers, including Advanced Micro Devices and Intel.

In early premarket trading, shares of AMD and Intel increased by 1.3 percent and 0.8 percent respectively.

China’s Domestic Chip Manufacturing

It is also worth noting that China is ramping up its domestic chip manufacturing capabilities to lessen its dependence on Nvidia.

Morningstar analysts have pointed out that there is “no guarantee” that the H200 chips will achieve widespread adoption within the Chinese market compared to domestic alternatives.

This year, Nvidia’s stock has surged nearly 40 percent, contrasting with the 16.4 percent increase in the S&P 500 benchmark index during the same period.