US clears Nvidia H200 exports to China amid chip-smuggling case

• The US will allow Nvidia’s H200 chips into China with a 25% fee.
• The news came the same day two men were charged with smuggling Nvidia chips to China.

The United States will allow Nvidia’s H200 processors — its second-fastest AI chips — to be exported to China with a 25% fee added to each sale. As reported by ReutersPresident Donald Trump shared the decision on Monday, saying he had notified Chinese President Xi Jinping, who “responded positively.”

The move ends months of debate in Washington over whether US chipmakers should keep selling advanced processors to China or hold back to protect national security. It is not yet clear if the change will lead to major new purchases. Beijing has told local firms to avoid US tech, and Nvidia’s chips are still under government scrutiny in China.

Nvidia’s shares gained after Trump posted the update on Truth Social. He said the Commerce Department is finishing the details and that the same rules would apply to AMD and Intel. A White House official later explained that the 25% fee will be collected as a US import tax when the chips arrive from Taiwan. US officials will inspect the chips before they are cleared to be exported to China.

Trump argued that the arrangement supports national security and US jobs while allowing American firms to keep their edge in AI. He also pointed out that US customers are already shifting to Nvidia’s newer Blackwell chips and will later adopt Rubin, which are not part of the deal.

Officials say the decision is a middle ground: China will not receive Nvidia’s newest processors, but the US will not cut off chip shipments entirely — a step some fear would push Chinese companies closer to Huawei’s domestic alternatives. Nvidia supported the approach, saying that allowing H200 sales to vetted commercial buyers “strikes a thoughtful balance.” Intel declined to comment, and AMD did not respond.

Security concerns remain

Some lawmakers, especially those who focus on China policy, warn that selling more capable AI chips to China could still help Beijing strengthen its military. Eric Hirschhorn, a former senior Commerce Department official, said it is “a terrible mistake” to trade national security risks for economic gain.

A recent report from the Institute for Progress said the H200 is almost six times more powerful than the H20, the most advanced chip currently cleared for export to China. The Blackwell chip widely used by US firms is faster still.

Several Democratic senators criticised Trump’s decision, calling it a “colossal economic and national security failure.”

Meanwhile, China’s cybersecurity regulator recently pressed Nvidia on whether its older H20 chip includes any backdoor risks — a claim the company has rejected. Despite the tension, experts say Chinese firms are likely to buy the H200 because it is still far ahead of what is locally available.

Craig Singleton of the Foundation for Defense of Democracies said China’s response may hinge on the government’s desire to reduce dependence on US technology. “Washington may approve the chips, but Beijing still has to let them in,” he said.

The policy shift landed on the same day the US government revealed new details about an alleged chip-smuggling network — a case that highlights how high-demand AI processors continue to fuel covert attempts to obtain restricted hardware.

Federal charges filed over suspected Nvidia chip smuggling

As the export policy was taking shape, the Justice Department announced that two Chinese men have been arrested for allegedly trying to move Nvidia’s H100 and H200 chips to China in violation of US export rules.

Prosecutors say Fanyue Gong, 43, a Chinese citizen living in New York, and Benlin Yuan, 58, a Canadian citizen from China, worked with employees at a Hong Kong logistics firm and a China-based AI company to skirt US controls. According to court filings, the group acquired chips through straw buyers and intermediaries, then claimed the orders were for customers in the US or in places like Taiwan and Thailand.

Investigators say the chips were shipped to US warehouses, where workers removed Nvidia labels and replaced them with labels from what appears to have been a fake company. The relabelled goods were then prepared for export.

In a separate complaint, prosecutors say Yuan arranged for people to inspect the shipments on behalf of the Hong Kong firm. He allegedly told them not to disclose that the chips were bound for China and helped plan a cover story to use if federal agents detained the goods.

Court filings indicate the scheme may have been running since at least November 2023.

Another man, Alan Hao Hsu, pleaded guilty in October to smuggling and export-control violations tied to the same network. Prosecutors say Hsu and his company received more than $50 million from China to fund operations that moved or attempted to move at least $160 million worth of restricted Nvidia chips.

“Operation Gatekeeper has exposed a sophisticated smuggling network that threatens our Nation’s security by funneling cutting-edge AI technology to those who would use it against American interests,” said Nicholas J. Ganjei, the US attorney for the Southern District of Texas.

A Nvidia spokesperson said the company works with authorities and customers to prevent second-hand smuggling, and noted that older-generation chips sold on the secondary market are “subject to strict security and review.”

The Chinese Embassy in Washington and a lawyer for Yuan did not comment.

The case adds to a broader effort by the US government to limit China’s access to advanced semiconductors. Export controls introduced in 2022 restricted China from buying many high-end chips made with US equipment, and the Trump administration later expanded the rules to cover subsidiaries that are majority-owned by firms already on the restricted list.

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