Shares of Nvidia Corp. and Advanced Micro Devices Inc. jumped today on the news that they will resume the sale of artificial intelligence chips to China.

The development comes three months after the U.S. Commerce Department effectively banned such exports. 

In 2022, the U.S. rolled out a set of export controls that limited the sale of advanced AI chips to China. The restrictions applied to graphics processing units that exceeded certain performance thresholds. In response, Nvidia and AMD developed scaled-down versions of their GPUs for the Chinese market.

Nvidia’s scaled-down chip is called the H20. Introduced in 2023, it’s a slower version of the company’s H100 chip, which was at one point its fastest data center AI accelerator. AMD’s scaled-down chip is known as the MI308.

Earlier this year, Nvidia Chief Executive Officer Jensen Huang revealed that the export controls had halved the company’s revenue in China. Even so, the company generated sales of $17 billion in the country during its fiscal year ended January 26.

In April, the Commerce Department informed Nvidia and AMD that they would require a license to sell their scaled-down AI chips to China. The move effectively banned such exports. Nvidia projected that the development would cost it $5.5 billion in the fiscal fourth quarter, while AMD warned shareholders of a $800 million charge.

Investors welcomed today’s announcements of the export resumption. Shares of Nvidia gained more than 3.9% in today’s trading session while AMD is up 5.6%.

“Nvidia is filing applications to sell the Nvidia H20 GPU again,” the company said in a late Monday statement.  “The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon.”

Nvidia also previewed a new chip dubbed the RTX PRO that it describes as “fully compliant.” That might indicate the chip can be exported to China. Nvidia didn’t share the processor’s specifications, disclosing only that it’s “ideal for digital twin AI for smart factories and logistics.”

According to Reuters, investment firm Hargreaves Lansdown expects the development to boost Nvidia’s revenue by $15 billion to $20 billion this year. The exact sum will depend on multiple factors. One is the speed at which the company’s export requests will be granted, while the other is the pace at which it can ramp up chip production to meet demand.

Reuters cited sources as saying that customers in China are “scrambling to buy” the H20. TikTok parent ByteDance Ltd. and Tencent Holdings Ltd. are reportedly among the companies that plan to place orders. 

Photo: Nvidia