U.S. Administration Grants Nvidia Conditional Access to Chinese Semiconductor Market

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Shares of Nvidia saw notable gains in after-hours trading on Monday following a significant policy shift announced by U.S. President Donald Trump. The new directive permits the chipmaker to resume sales of its high-performance H200 processors to a select group of clients in China, subject to a key stipulation: 25% of the revenue generated must be paid directly to the U.S. Treasury.

The move, formalized by the U.S. Commerce Department on December 8, unlocks a substantial revenue stream for Nvidia. Chief Financial Officer Colette Kress had previously estimated in August that potential exports to China could bring in between $2 billion and $5 billion per quarter. The H200 chips represent a significant performance leap, being approximately six times more powerful than the H20 models Nvidia had designed specifically for the Chinese market to navigate earlier sanctions.

Market experts maintain an optimistic outlook. According to StockAnalysis, the average price target for Nvidia stands at $248.64, implying an upside potential of roughly 34%. Citi analyst Atif Malik recently reaffirmed his $270 price target, citing growing demand for AI models that require the precise memory bandwidth offered by the H200 and future architectures.

Terms of the Revised Export Agreement

The arrangement contains several critical conditions that differ from prior discussions:

• Revenue Share: A quarter of all sales proceeds will be directed to the U.S. Treasury, a figure notably higher than the 15% rate Nvidia and AMD had tentatively agreed upon in August.
• Approved Clients: Sales are restricted solely to vetted Chinese companies included on a government-approved whitelist.
• Technology Cap: The latest Blackwell and Rubin architecture platforms remain under strict export prohibition.

For major Chinese technology firms like Alibaba and Tencent, which have relied on Huawei chips or older Nvidia hardware, access to the H200 processors will deliver a substantial boost in computational capability.

Political Context and Industry Debate

President Trump stated that he personally informed Chinese President Xi Jinping of the decision and received a favorable response. The policy aims to sustain American dominance within the global semiconductor supply chain while simultaneously creating a direct source of government income.

The decision has not been without controversy. Democratic Senator Elizabeth Warren warned yesterday of the security risks associated with supplying advanced computing power to China. This contrasts with the lobbying efforts of Nvidia CEO Jensen Huang, who had vigorously argued for eased restrictions, contending that total export bans would only accelerate the development of China's domestic chip industry.

Valuation and Technical Outlook

Nvidia's stock currently trades at a forward P/E ratio of approximately 24 for the fiscal year 2027. A key test will come on Wednesday as traders watch to see if the psychologically important $190 level can be sustainably breached. A definitive breakthrough above this mark could pave the way for a retest of the 52-week high of $212.19.