The H20 precedent says Beijing will reject the H200 exactly like it did five months ago. Markets are pricing in revenue. They should be pricing in demand reality.
Jensen Huang just convinced Trump to grant Nvidia (NASDAQ:NVDA) permission to sell its H200 chips to China. But Huang’s own words five days earlier should remind anyone bullish on NVDA: “We don’t know. We have no clue” whether China will actually buy the chips.
That casual admission, made to Senate Banking Committee reporters on December 3, contrasts over Trump’s approval. The CEO of the world’s most valuable chipmaker is telling investors that getting regulatory green light from Washington is only half the battle. The other half, Beijing’s demand, still remains a complete mystery.
There is a reason for that uncertainty: Nvidia has lived through this exact sequence just five months ago with the H20 chip, and it ended in a $5.5 billion write-off. History is about to repeat itself, and traders betting on China revenue are walking into the same trap again: Markets are pricing in regulatory victory. They should be pricing in demand reality.
The H20 Timeline shows the exact pattern your article warns will repeat: approval in July, enthusiasm in mid-July, Beijing rejection in August, production halt and write-off by September. This is the precedent that makes the H200 “approval” suspect.
The H20 Rejection That Predicts H200's Fate
The H20 story is recent enough that investors should remember it. But they seem to have forgotten.
In July 2025, the Trump administration approved H20 exports after months of Huang's lobbying. Nvidia framed it as a breakthrough. Access to China's AI market. A potential $50 billion revenue opportunity. Wall Street bought the story. NVDA rallied.
Within weeks, it fell apart.
Beijing issued guidance to major Chinese tech firms: do not buy American chips. Use domestic alternatives instead. No formal ban. No public announcement. Just quiet pressure that killed demand overnight. Nvidia's H20 became untouchable. Not because it lacked capability. The chip was well-suited for inference workloads that Chinese AI companies needed. But capability did not matter. Politics did.
By August, Nvidia halted H20 production entirely and took a $5.5 billion quarterly charge tied to China export losses. The "breakthrough" became a write-off.
Now fast forward to December. Same CEO. Same lobbying playbook. Same country. Different chip model.
The H200 is roughly twice as powerful as the H20. But power is not the problem. The problem is that China's strategic goal has not changed: reduce dependence on American semiconductors. A stronger American chip does not solve that goal. It makes the rejection more certain.
Huang Admits He Has No Idea If China Will Buy
Here is the quote that should concern every Nvidia investor.
When Huang left the Senate Banking Committee on December 3, reporters asked whether China would accept the H200 if export restrictions eased. His answer: "We don't know. We have no clue."
That is not false modesty. That is the CEO of the world's most valuable chipmaker admitting he cannot predict whether his largest potential market will actually buy his product.
He added another revealing line: "We can't degrade chips that we sell to China. They won't accept that."
Read that carefully. China will not accept degraded chips designed to comply with export controls. But China also blocked the H20, which was designed to fall just below existing limits. So what exactly will China accept?
The answer, based on Beijing's actions over the past year, appears to be: nothing American.
The $50 Billion Market That Does Not Exist
Huang has repeatedly cited a $50 billion China opportunity. He said it again last month in a Bloomberg interview. "We would love the opportunity to be able to reengage the Chinese market."
But that number assumes demand exists. It does not account for Beijing's active suppression of that demand.
Think of it like winning a liquor license in a town that just voted dry. You have legal permission to sell. But the customers have been told not to buy. The license is worth nothing if nobody walks through the door.
China's semiconductor strategy is clear and well-documented. The government has poured over $140 billion into domestic chip development since 2014. Huawei, SMIC, and other domestic players have become national priorities. Every dollar spent on Nvidia is a dollar not spent building Chinese chip independence. Beijing views this as a national security imperative.
The H200 approval does not change that calculation. If anything, it reinforces it. Chinese officials can point to the approval and say: this is exactly why we need domestic alternatives. America can turn this tap on and off at will. We cannot depend on it.
Regulatory Approval Is Not Revenue
There is a gap between permission and payment that traders are 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 does not mean the chips will generate actual revenue.
The H20 proved this exact sequence. Approved in July. Demand killed by August. Write-down in September.
Investors treating the H200 approval as a catalyst are making a category error. They are trading regulatory news as if it were commercial news. These are different things.
Consider the mechanics. Nvidia needs Chinese cloud providers and AI companies to place orders. Those companies need Beijing's tacit approval to buy American chips. Beijing has spent the past year signaling the opposite: buy domestic. Nothing about the H200 approval changes Beijing's incentives.
If you are long NVDA based on China revenue assumptions, you are betting that Xi Jinping will reverse a multi-year strategic priority because Trump signed off on a chip export. That is not a trade. That is hope dressed up as analysis.
The Short-Term Rally Trap
NVDA will likely pop on this news. It always does when headlines say "approval" and "China" in the same sentence. Traders react to keywords. That is normal.
The question is whether that rally has legs. Based on the H20 precedent, the answer is probably no.
The pattern looks like this:
- Approval announcement drives initial buying
- Market waits for actual order flow
- No meaningful orders materialize
- Stock gives back gains as revenue expectations reset
We saw this exact sequence five months ago. Investors who bought the H20 approval and held through the Beijing rejection lost money. Investors who sold the rally made money.
The structural reality has not changed. China wants chip independence, not chip imports. The H200 is a better product than the H20. But a better product does not overcome a government that has decided not to buy.
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.
What Investors Should Watch
If you want to trade NVDA around this news, here are the signals that matter:
Order announcements from Chinese cloud providers. Alibaba, Tencent, ByteDance, Baidu. If they announce H200 orders, the thesis changes. If weeks pass with silence, the H20 pattern is repeating.
Beijing guidance signals. Watch for reports of government pressure on Chinese tech firms. These will come through Chinese business media first, often as unnamed sources.
Nvidia's revenue guidance revisions. The company has excluded China data center revenue from forecasts. If they add it back, that signals real confidence. If they keep it excluded, management knows what the H20 taught them.
The 25% revenue share mechanism. This unprecedented arrangement has not generated any payments because there have been no sales. If it remains inactive, the approval is symbolic only.
The Real Trade
Huang won Trump's approval. He did not win Beijing's demand. Until Chinese orders actually flow, the H200 "victory" is a permission slip with no practical value.
The H20 showed us exactly how this plays out. Approval comes. Demand does not. The stock rallies on headlines, then fades as commercial reality sets in.
Traders betting on China revenue should wait for actual evidence that revenue will materialize. So far, Beijing has given us the opposite signal. Three months ago. And nothing has changed.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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