America's AI chip wall now has a gate

Washington spent years stopping Nvidia from selling its best AI chips to China. It is now allowing selected Chinese companies to buy the much more powerful H200. That is not the end of export controls. It is a different idea of what they are for.

For several years, US policy on AI chips looked fairly easy to understand. China wanted Nvidia’s most powerful processors; Washington did not want it to have them. The first big controls arrived in 2022, restricting chips including Nvidia’s A100 and H100. Nvidia responded by making slightly weaker versions, the A800 and H800, which were designed to stay just below the American limits. The US tightened the rules again in October 2023 and those chips were caught too.

Nvidia responded again. Its H20 was built specifically for China and deliberately made less powerful than the company’s best chips so that it could comply with the new rules.

For a while, that worked. Then, in April 2025, Washington told Nvidia that the H20 would need an export licence as well. Nvidia was left with chips it could no longer freely sell into the market they had been designed for and eventually took a $4.5 billion charge against unsold inventory and purchase commitments. At that point the direction of travel seemed obvious. Each time Nvidia found a way through the rules, Washington closed the gap.

Except that is not what happened next. In August 2025, the US government began granting licences for some H20 sales to Chinese customers. Then, in January 2026, it went considerably further. The Commerce Department announced that applications to sell Nvidia’s H200 to China would be considered case by case, provided buyers met a series of security conditions.

The H200 matters because it is not another deliberately weakened China chip. It is significantly more capable than the H20 and exactly the sort of advanced AI processor the controls were originally supposed to keep out of China.

Nvidia said in February that Washington had granted licences allowing small quantities to be sold to specific Chinese customers. And this is no longer just a change on paper. On 19 August, the Financial Times reported that ByteDance and Tencent had each received around 10,000 H200s in mainland China. Reuters said the US had authorised up to 100,000 per company, although it could not independently verify the shipments.

This does not mean America has given up on controlling AI chips. Nvidia cannot simply sell H200s to anybody in China. Buyers have to be approved, the chips have to be inspected in the United States, and Washington can refuse licences.

But the purpose of the controls is becoming less simple. There has always been a problem with completely cutting China off. If Chinese technology companies cannot buy useful Nvidia chips, they do not stop building AI systems. They buy Chinese ones instead. That gives companies such as Huawei more customers, more money and more reason to improve their own hardware and software.

Nvidia has been warning about this for some time. Last year it told investors that being shut out of China would help its Chinese competitors build larger groups of customers and developers capable of challenging it elsewhere.

The Trump administration has now adopted at least part of that argument. When it changed the H200 rules in January, the Commerce Department said allowing controlled sales would strengthen the American technology ecosystem.

There is a logic to this, even if it produces a strange result. America can try to keep its best technology away from China altogether. That may slow Chinese AI development, but it also gives China every reason to replace American technology.

Or it can allow China limited access to American chips while keeping control over who buys them and how many they receive. China gets more computing power, but Chinese companies remain tied to Nvidia and the wider American technology ecosystem.

For the first few years of the chip controls, Washington mostly chose the first option. The H200 suggests it is experimenting with the second. The wall is still there, but America has decided that controlling the gate may be more useful than keeping it permanently closed.