Trump chip revenue cut allegedly backfires as China freezes Nvidia H200 orders

The chip that wasn’t wanted

You might have heard about a big fight between the US and China over computer chips. The latest twist is downright puzzling. It involves Nvidia, President Trump, and a powerful chip called the H200.

The official story is about this Nvidia H200 chip. Trump gave the green light for it to be sold in China late last year. It seemed like a win for everyone: Nvidia gets sales, China gets tech. But that’s not what happened at all.

What makes this chip so special?

The Nvidia H200 is a powerful AI processor built for demanding artificial intelligence workloads. It is designed to handle large models and heavy data movement, especially in data centers.

The chip includes 141GB of HBM3e memory and 4.8TB/s of memory bandwidth. That gives it about 43% more memory bandwidth than the H100 SXM, though Nvidia’s newer Blackwell chips have since moved ahead at the highest end of the AI chip market.

No one is buying a single chip

Here is the surprising part. Even though the U.S. cleared H200 sales to several Chinese firms, Reuters reported that no H200 deliveries had been made as of mid-May 2026.

Major names, including Alibaba, Tencent, ByteDance, and JD.com, were among the companies approved to buy the chips. Some reports said the U.S. had discussed limits of up to 75,000 H200 chips per Chinese customer, but the deals remain stalled while Beijing pushes companies toward domestic alternatives.

China’s big made at home plan

So why isn’t China buying? The main reason is that Beijing wants to make its own stuff. They are pushing hard for tech independence, and they mean business.

Officials are telling local companies to buy Chinese chips instead. They want to build a strong AI industry without relying on US companies. It is a matter of pride, security, and long-term strategy. Buying from Nvidia would mean admitting they still need foreign help. That is a tough pill to swallow.

Fun fact: State-owned data centers in China must now ensure over half of their chips come from domestic manufacturers.

The Huawei comeback story

Huawei has become one of China’s most important domestic AI chip alternatives as U.S. export controls limit access to advanced Nvidia hardware. Its Ascend chips are gaining attention inside China, even though they still trail Nvidia’s H200 in key performance measures.

Chinese AI companies are also adapting more of their work to domestic chips. Reuters reported that DeepSeek V4 was designed to work with Huawei’s advanced Ascend AI chips, giving China a stronger backup path as it tries to reduce dependence on Nvidia.

A very expensive no

For Nvidia CEO Jensen Huang, China remains a major missed opportunity. Reuters reported that Huang previously estimated China’s AI market alone could be worth about $50 billion this year.

Nvidia is still reporting huge results outside that stalled opportunity. In May 2026, the company posted $58.3 billion in quarterly net income, up 211% from a year earlier, while its market value remained above $5 trillion during the same period.

Fun fact: Nvidia’s market value has grown 15 times over the past five years to about $5.6 trillion.

The weird 25% rule

There is an unusual catch to the H200 deal. Trump said the U.S. would collect a 25% fee on Nvidia H200 sales to China, a structure that analysts described as highly unusual for export policy.

Reports also described added conditions, including U.S.-based review or inspection steps before chips could reach Chinese buyers. Those conditions add to Beijing’s concerns about dependence on U.S. hardware at a time when Chinese officials have already raised security questions about Nvidia chips.

Fun fact: Nvidia’s stock price jumped over 4% the day the H200 approval was announced, adding billions to Jensen Huang’s personal fortune.

Fear of a digital back door

Chinese officials are deeply suspicious that US chips could have hidden back doors. A back door would let the US government sneak a peek at data or even turn the chips off remotely.

NVIDIA insists its products are completely safe and contain no such flaws. But trust between these two superpowers is badly broken. The US keeps changing its mind on export rules, and China has learned not to rely on American promises. Suspicion runs deep on both sides.

What Nvidia’s CEO is doing now

Jensen Huang is still trying to keep Nvidia connected to China. Reuters reported that he joined President Trump’s Beijing delegation in May 2026 as the company looked for a breakthrough on stalled H200 sales.

Huang also drew attention during the trip when he was seen eating Beijing zhajiangmian and interacting with people in public. He told Chinese state broadcaster CCTV that he hoped Trump and Xi Jinping could improve two-way ties during their talks.

The $123 billion question

Even though they are saying no to Nvidia, Chinese companies still desperately need computing power. They are expected to spend $123 billion on AI chips and data centers this year alone.

The money is there. They just are not spending it on US chips right now. Instead, they are renting chips from other countries or buying less powerful local versions. Some are even using AMD chips as a temporary fix. The demand is enormous, but the direction is clear, inward.

A strange kind of help

Believe it or not, some US officials are quietly happy about this mess. They think blocking Nvidia sales helps America stay ahead in the AI race.

The argument goes like this: if China buys US chips, they will catch up too fast. By refusing the chips, China is actually slowing its own progress down. It is a weird situation where the “no” helps the other side. But for now, both governments seem stuck in a standoff that no one fully controls.

The cloud loophole

Chinese companies have found a sneaky way to get power without buying chips directly. They are renting cloud services from data centers located outside of China.

This lets them use Nvidia chips without actually owning them. But this trick has big downsides. It is slower, riskier for data leaks, and the US could shut it down with new laws tomorrow. It is a Band-Aid solution, not a real fix. Eventually, China will need to either buy chips or build better ones.

If you’re wondering how Nvidia is responding to these kinds of global workarounds, check out Nvidia unveils next AI breakthrough at Megaconference to see what’s coming next in the chip race.

So, what happens next?

For now, the fancy Nvidia chips are stuck in limbo. The US says sell, but China says not yet. The standoff shows how deep the distrust runs between these two superpowers.

It might take a long time before any H200 chips land in China. Until then, both sides will keep building their own tech walls. NVIDIA will keep making billions elsewhere, and China will keep investing in homegrown alternatives. It is a new era of every nation for itself.

If you want to hear how AI is already shaping real-world conflicts beyond the chip wars, check out the USA Today podcast, which discusses how AI is being used in the Iran war for the full breakdown.

What’s your take on China saying no thanks to US chips? Drop a comment below, and give this slideshow a like if you found it interesting.

This slideshow was made with AI assistance and human editing.

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