The U.S. government has cleared around 10 Chinese firms to purchase Nvidia's H200 AI chip, but has simultaneously negotiated an arrangement to receive 25% of the revenue from these sales, revealing the state's direct role in capital accumulation amidst a stalled deal. No deliveries of the second-most powerful AI chip have been made, leaving the transaction in limbo despite Nvidia CEO Jensen Huang's efforts to secure a breakthrough in China this week. Huang, who was added to a White House delegation after an invitation from President Donald Trump, joined the trip to Beijing, raising hopes for unlocking stalled sales.
The State's Hand in Capital Accumulation
The U.S. Commerce Department has approved approximately 10 Chinese companies, including Alibaba, Tencent, ByteDance, and JD.com, to acquire Nvidia's H200 chips. Distributors such as Lenovo and Foxconn have also received approval. These buyers are permitted to purchase up to 75,000 chips each, either directly from Nvidia or through authorized intermediaries, under the U.S. licensing terms. The identities of these approved buyers and their relationships with Nvidia and distributors were not previously reported. Lenovo confirmed its approval to sell H200 chips in China as part of Nvidia's export license. The U.S. government's arrangement mandates that the chips must pass through U.S. territory before shipment to China, a structure described as a workaround to legal constraints that do not permit the direct imposition of export fees. This mechanism ensures the U.S. state directly benefits from the transaction, securing a quarter of the revenue.
Imperialist Rivalry and Market Control
Before U.S. export curbs tightened, Nvidia held approximately 95% of China's advanced chip market. China once accounted for 13% of Nvidia's total revenue, and CEO Huang previously estimated China's AI market alone would be worth $50 billion this year. Despite U.S. approval for sales, Chinese firms have pulled back from deals, following guidance from Beijing. This shift was partly triggered by changes on the U.S. side, though the exact nature of these changes remains unclear. In Beijing, pressure is mounting to block or tightly vet these orders, as the Chinese central government fears that imports could weaken its strategic push to develop homegrown AI chips. Commerce Secretary Howard Lutnick stated last month at a Senate hearing that the Chinese central government has not yet allowed purchases, aiming to keep investment focused on its domestic industry. This highlights the state's role in directing capital within its borders to serve national industrial goals.
China's strategic calculation reflects a broader struggle for technological independence. While China's AI chips still lag behind Nvidia, domestic firms like DeepSeek are increasingly promoting their reliance on chips developed by Huawei and other local producers. Nvidia CEO Huang has warned that U.S. export controls are eroding the company's foothold, claiming its share of AI accelerators in China has effectively fallen to zero. The path to a completed sale is obstructed by requirements from both sides, illustrating the complex web of state control over international capital flows. U.S. rules issued in January of the same year demand Chinese buyers demonstrate "sufficient security procedures" and guarantee the chips will not be used for military purposes. Nvidia must also certify sufficient inventory within the United States.
Capital's Strategic Calculations
The U.S. government's revenue-sharing arrangement has caused unease in Beijing, which harbors concerns over potential tampering or hidden vulnerabilities in chips passing through U.S. territory. This scrutiny has intensified following the State Council's recent issuance of two supply chain security regulations, initiating a government-wide effort to identify and eliminate foreign dependencies in critical technology infrastructure. The continued delay in sales is welcomed by China hardliners in Washington. Chris McGuire, senior fellow for China and emerging technologies at the Council on Foreign Relations, stated that any deal allowing Nvidia to sell more chips to China would mean fewer chips for U.S. firms and a smaller U.S. lead in AI over China. McGuire further criticized President Trump for allegedly prioritizing Nvidia's interests over those of the U.S. This internal capitalist conflict within the U.S. ruling class underscores the competitive nature of global capital, even among allies, and the state's role in mediating these interests. Huang told state broadcaster CCTV on Thursday of the same day that he hoped Trump and Xi would build on their relationship to improve two-way ties, a sentiment that prioritizes corporate access to markets over national strategic concerns.